New York Stock Market Opens Slightly Higher Awaiting FOMC Minutes

[Asia Economy New York=Special Correspondent Joselgina] The U.S. New York stock market started with a slight rise on the 22nd (local time) ahead of the release of the February Federal Open Market Committee (FOMC) minutes in the afternoon.

As of 9:52 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was up 53.12 points (0.16%) from the previous close, trading at 33,182.71. The S&P 500 index, centered on large-cap stocks, rose 10.41 points (0.26%) to 4,007.75, and the tech-heavy Nasdaq index recorded 61.75 points (0.54%) higher at 11,554.06.

[Image source=Reuters Yonhap News]

The previous day, the New York stock market had all fallen by more than 2% due to concerns over the Fed maintaining high interest rates for a longer period and disappointing corporate earnings guidance. This was the worst drop since the beginning of the year. Keith Lerner, co-chief investment officer at Truist, said, "The market has been readjusted due to expectations that the Fed will have to maintain higher interest rates for a longer time and due to rate hikes."

Now, investors' attention is focused on the February FOMC minutes to be released at 2 p.m. today. Through this, they aim to confirm the committee members' assessments of inflation and the economic situation and seek hints about the future magnitude and duration of interest rate hikes.

James Bullard, president of the Federal Reserve Bank of St. Louis and a prominent hawk within the Fed, appeared on CNBC's Squawk Box this morning, stating that the U.S. economy is stronger than expected and supporting more aggressive rate hikes. Having previously left open the possibility of a big step (a 0.5 percentage point increase in the benchmark rate) in March, he reiterated his existing claim that the benchmark rate should be raised to around 5.375% as soon as possible, saying, "It needs to go above 5%." This level exceeds the median year-end rate forecast (5.1%) on the dot plot presented by the Fed in December last year.

However, according to the CME's FedWatch tool, despite inflation indicators exceeding expectations and heightened tightening concerns, the federal funds (FF) futures market still places more weight on the possibility of a 0.25 percentage point rate hike in March. This suggests that, separate from expectations of prolonged tightening, the likelihood of an expanded rate hike in March is low. The remarks by Bullard, a representative hawk, were also considered less hawkish than expected, somewhat easing the tightening pressure on the stock market.

Accordingly, investors are expected to anticipate the Fed's tightening moves by examining the detailed contents of the FOMC minutes released today, along with economic indicators and Fed officials' remarks to be disclosed before the March FOMC. Grace Peters, investment strategist at JPMorgan Private Bank, said, "What currently attracts market attention is resilient growth," adding, "This could imply more resilient inflation."

In the afternoon, John Williams, president of the New York Fed and the third-ranking Fed official, will also speak. Later this week, speeches by Raphael Bostic, president of the Atlanta Fed, and Philip Jefferson, Fed governor, are scheduled, providing additional evaluations of recent inflation, growth, and employment. On the following day, the revised U.S. fourth-quarter GDP growth rate will be announced. The preliminary figure released last month was a relatively robust annualized 2.9%, and the revision is expected to show little adjustment. The January personal consumption expenditures (PCE) data, to be released on the 24th, is estimated to show a 4.3% year-over-year increase and a 0.4% month-over-month rise.

In the New York bond market, the current yield on the 10-year U.S. Treasury is around 3.92%. The 2-year yield, sensitive to monetary policy, stands at 4.66%. The foreign exchange market is showing little volatility. The euro was steady at $1.0650, and the British pound was stable at $1.2107. The yen rose 0.4%, trading at 134.51 yen per dollar.

Corporate earnings announcements continue. Amid earnings warnings from companies like Home Depot the previous day, only 68% of S&P 500 companies that have reported so far have posted quarterly results exceeding Wall Street expectations. After the market closes today, earnings reports from Nvidia, eBay, and others are scheduled.

Currently, nine sectors within the S&P 500, excluding financials and healthcare, are all showing gains. Cybersecurity company Palo Alto Networks surged more than 12% after beating Wall Street expectations and raising its earnings guidance for the year. The company has maintained a three-quarter consecutive profit streak for the first time in 10 years. Cryptocurrency exchange platform Coinbase also rose more than 5% after exceeding earnings expectations. On the other hand, Costa Group plunged more than 6% due to quarterly guidance falling short of expectations.

Market tensions between the U.S. and Russia continue ahead of the one-year anniversary of the Ukraine war outbreak. President Joe Biden, visiting Poland after Kyiv, criticized Russian President Vladimir Putin's announcement yesterday to suspend the U.S.-Russia nuclear arms control agreement 'New START' as a "big mistake." He also reaffirmed the U.S. commitment to defend every inch of NATO territory.

European stock markets are also showing slight declines. Germany's DAX index fell 0.12%, the UK's FTSE index dropped 0.69%, and France's CAC index moved down 0.20%.