[New York Stock Market] Closes Lower Amid Recession Concerns... Nasdaq Down 0.52%

The three major indices of the U.S. New York stock market all closed lower on the 4th (local time) as concerns over an economic recession resurfaced due to rising oil prices, the possibility of a slowdown in the labor market, and weak economic indicators.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,402.38, down 198.77 points (0.59%) from the previous session. The S&P 500, which focuses on large-cap stocks, fell 23.91 points (0.58%) to 4,100.60, and the tech-heavy Nasdaq index dropped 63.13 points (0.52%) to close at 12,126.33.

Among the S&P 500 sectors, seven sectors excluding utilities, health care, communication services, and real estate showed declines. In particular, industrials, energy, materials, and financial sectors recorded losses exceeding 1%. By individual stocks, United Rentals and Generac Holdings led the industrial sector's decline, falling 7.70% and 6.20%, respectively, from the previous session. The theater chain AMC dropped more than 23% after shareholders revealed a settlement plan for additional capital raising to resolve lawsuits. Virgin Orbit closed down 23.19% following a Chapter 11 bankruptcy protection filing. Virgin Orbit, which had plummeted more than 70% in the morning session, later reduced its losses by announcing efforts to sell itself.

[Image source=Reuters Yonhap News]

Investors closely watched international oil price movements following OPEC+ production cut announcements, as well as economic indicators including the Job Openings and Labor Turnover Survey (JOLTs). The New York stock market, which started mixed, widened its losses after the release of U.S. February job openings data, which fell below 10 million for the first time in about two years. According to the JOLTs report, February job openings stood at 9.931 million, down approximately 630,000 from the previous month. This was the first time since May 2021 that monthly job openings fell below 10 million. The figure also missed the expert forecast of 10.4 million compiled by FactSet.

Daniel Zhao, Chief Economist at Glassdoor, analyzed, "This will definitely be the biggest news today," adding, "It reflects a continued cooling of the labor market." This signals a slowdown in the previously overheated U.S. labor market. Ed Yardeni, President of Yardeni Research, said, "There are still many jobs available," but noted, "The market is very sensitive even to minor changes in directions it does not want to see," describing the market sentiment.

Other indicators were also weak. U.S. factory orders in February decreased by 0.7% compared to the previous month, a larger drop than Wall Street had expected. According to the GDPNow model from the Federal Reserve Bank of Atlanta, the first-quarter growth forecast was sharply revised down to an annualized rate of 1.7% from 3.5% two weeks ago. Such weak indicators, combined with recent concerns over soaring oil prices, have rapidly heightened fears of an economic slowdown. Julien Emmanuel, Director at Evercore ISI, stated, "We are currently only feeling the initial effects of tightening," adding, "A recession will occur, albeit a shallow one, and the stock market will suffer the most as a result."

As job openings fell below 10 million for the first time in about two years, signaling a slowdown in the labor market, the market slightly increased the possibility that the Federal Reserve (Fed) will hold interest rates steady at the May FOMC meeting. Weak manufacturing data also supported this expectation of a pause. According to the Chicago Mercantile Exchange (CME) FedWatch tool, as of the afternoon of this day, the federal funds futures market priced in a 57% chance of a rate hold in May, up from the 42% range the previous day. Conversely, the probability of a 0.25 percentage point rate hike dropped from the 57% range to 43%.

The March employment report will be released on the 7th. Wall Street estimates that nonfarm payrolls for March will be around 240,000, reflecting a further decrease from February's 311,000. The unemployment rate is expected to remain unchanged at 3.6%. Although the New York stock market will be closed on that day due to Good Friday, so there will be no immediate market impact, the report is expected to provide additional hints regarding the Fed's future tightening path. Earlier, the Reserve Bank of Australia (RBA) held its rates steady.

In the New York bond market on this day, U.S. Treasury yields fell after the JOLTs report was released. The 10-year Treasury yield dropped to around 3.34%, and the 2-year Treasury yield, which is sensitive to monetary policy, fell to about 3.83%. The weak indicators also led to a decline in the U.S. dollar's value. The Dollar Index, which measures the dollar's value against six major currencies, traded below the previous close by more than 0.5%, around the 101.5 level.

Concerns surrounding banks triggered by the Silicon Valley Bank (SVB) crisis that shook the market last month still linger. Jamie Dimon, CEO of JP Morgan, known as the "Emperor of Wall Street," warned in his annual shareholder letter released on this day that "the current crisis is not over yet," and "even if it passes, there will be adverse effects for years to come." He said, "If Americans lose trust in banks, it harms all banks. This was known even before this crisis," and predicted, "(This situation) has caused much anxiety in the market and will lead banks and lenders to become more conservative, tightening financial conditions." However, he also added that this banking crisis is different from the 2008 global financial crisis.

Axel Lehmann, Chairman of Credit Suisse (CS), which was acquired by UBS after facing bankruptcy, publicly apologized at the annual shareholders' meeting. This was the first official apology since the incident. At the shareholders' meeting held in Zurich, Switzerland, Lehmann stated in his apology, "I believed the bank could be revived, but I was wrong. I am sorry." CS, which faced a liquidity crisis, was eventually merged with UBS under the support of Swiss authorities. However, the process caused controversy as investors suffered massive losses, including the write-down of $17 billion worth of CoCo bonds.

International oil prices continued their upward trend for the fourth consecutive trading day. On the New York Mercantile Exchange, May delivery West Texas Intermediate (WTI) crude oil closed at $80.71 per barrel, up 0.36% from the previous session. This closing price was the highest since January 26. Market forecasts also suggest that oil prices could exceed $100 per barrel. Fereydoun Fesharaki, Chairman of consulting firm FGE, predicted that due to a sharp inventory decline by year-end, "it could easily surpass $100 per barrel."