[New York Stock Market] Nasdaq Down 1% Awaiting Powell... Treasury Yields Surge

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed lower on the 6th (local time), awaiting this week's corporate earnings and remarks from Jerome Powell of the Federal Reserve (Fed). The strong employment report heightened concerns over tightening again, leading the New York stock market to continue its decline for two consecutive trading days. Meanwhile, Treasury yields surged.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,891.02, down 34.99 points (0.10%) from the previous session. The large-cap S&P 500 index fell 25.40 points (0.61%) to 4,111.08, and the tech-heavy Nasdaq index dropped 119.5 points (1.00%) to 11,887.45.

[Image source=Reuters Yonhap News]

By sector, nine out of the 11 sectors in the S&P 500 index declined, except for utilities and consumer staples. The declines in technology, communication, and materials stocks exceeded 1%.

Meat processing company Tyson Foods fell 4.61% from the previous session due to earnings below expectations. Children's apparel retailer Children’s Place also dropped more than 4% on weak earnings. Leading tech stock Apple declined 1.79%. Dell Technologies announced plans to cut 6,650 jobs, causing its shares to fall 3.03%. Meanwhile, the representative meme stock Bath & Beyond surged over 92%. Another meme stock, AMC, rose 11.84% after introducing a new theater seat pricing system.

Investors appeared to be taking profits while awaiting this week's scheduled corporate earnings and Powell's remarks the following day. Powell is scheduled to attend and participate in a discussion at the Economic Club of Washington DC the next day. Attention is focused on whether there will be a shift in his tone at this event, following his earlier 'disinflation' assessment and the release of a strong employment report.

At this event, Powell is expected to comment not only on employment indicators but also on interest rate hikes and disinflation remarks. Currently, investors anticipate that the Fed may either resume large interest rate hikes or maintain high rates for an extended period, based on strong employment data.

According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) rate futures market currently reflects more than a 71% probability that the May benchmark rate will reach 5.0?5.25%. This diminishes earlier speculation about a pause in rate hikes in March. The probability that the September rate will exceed 5% also surpasses 70%. This week, remarks are also scheduled from John Williams, President of the New York Federal Reserve Bank; Patrick Harker, President of the Philadelphia Federal Reserve Bank; and Christopher Waller, Fed Board member.

Corporate earnings announcements continue. Walt Disney, Chipotle, DuPont, PepsiCo, and UnitedHealth are among those releasing earnings this week. Investors are expected to look for signs of the impact of ongoing rate hikes since last year on corporate performance. According to Refinitiv, about half of the companies listed on the S&P 500 have reported earnings so far, with estimated corporate net profits for Q4 last year down 2.7% year-over-year.

In the New York bond market, Treasury yields rose. The benchmark 10-year U.S. Treasury yield regained the 3.6% level for the first time in about a month since January 11, reaching as high as 3.655% during the session. The 2-year yield, sensitive to monetary policy, rose to around 4.48%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s ‘fear gauge,’ rose 6% from the previous session to the 19 level.

The U.S. dollar strengthened. The Dollar Index, which measures the dollar’s value against six major currencies, rose about 0.7% to around 103.6.

Oil prices rebounded after four trading days of decline, supported by buying interest. On the New York Mercantile Exchange, March delivery West Texas Intermediate (WTI) crude oil closed at $74.11 per barrel, up 72 cents (0.98%) from the previous session. Although some pipelines were shut down due to the earthquake in T?rkiye, the impact on the market was limited.