[New York Stock Market] Closes Lower Amid Global Tightening... Nasdaq Down 1.01%

As global tightening continues and concerns about an economic recession grow again, the New York stock market closed lower on the 23rd (local time).

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,727.43, down 219.28 points (0.65%) from the previous session. The S&P 500, which is centered on large-cap stocks, fell 33.56 points (0.77%) to 4,348.33, and the tech-heavy Nasdaq index closed at 13,492.52, down 138.09 points (1.01%) from the previous session.

All three major indices stopped their upward momentum for the first time in a while and turned downward. The S&P 500 fell about 1.39%, ending a five-week winning streak, and the Nasdaq also dropped 1.44%, ending an eight-week consecutive rise. The Dow fell 1.67%, marking its first decline in four weeks.

[Image source=Yonhap News]

This is due to the tightening moves by central banks around the world, including the Federal Reserve (Fed). Investors had expected that the Fed's rate hikes were nearing an end and that rate cuts would begin within the year, but Fed Chair Jerome Powell's announcement of two rate hikes this year has led to a reassessment of market rate expectations. The Bank of England and the Norges Bank have also implemented rate hikes exceeding expectations, raising concerns that the tightening cycle is far from over.

As tightening reemerged, signals of an economic recession appeared. The inversion of the government bond yield curve deepened, and U.S. manufacturing activity showed its lowest level in half a year. The U.S. manufacturing Purchasing Managers' Index (PMI) for June, released by S&P Global, was preliminarily recorded at 46.3, the lowest in six months. This figure was below the Wall Street Journal (WSJ) forecast of 49 and the previous month's 48.4. The preliminary June services PMI was 54.1, down from 54.9 the previous month, though slightly above market expectations of 53.8.

The manufacturing situation in the Eurozone was no different. The Eurozone's June manufacturing PMI was preliminarily recorded at 43.6, lower than both the previous month's figure and the market expectation of 44.8. The Eurozone's June services PMI also recorded 52.4, marking the lowest level in five months, falling short of the previous month's 55.1 and the market expectation of 54.5.

U.S. Treasury Secretary Janet Yellen said in an interview with a foreign media outlet on the same day that the possibility of a recession has decreased, but the bond market reacted differently. The spread between 10-year and 2-year yields widened to -100 basis points. The deepening yield inversion indicates that recession risks are being priced into bond prices. Short-term yields continued to rise as the Fed hinted at the possibility of further rate hikes, but long-term yields remained in the mid-3% range due to growing recession risks, widening the gap.