[New York Stock Market] Ahead of Jackson Hole... Nasdaq Up 1.56% Despite Sharp Rise in US Treasury Yields

The three major indices of the U.S. New York stock market closed mixed on Monday, the 21st (local time), ahead of key events scheduled for this week, including Nvidia's earnings announcement and the Jackson Hole meeting. Despite concerns over tightening monetary policy pushing the 10-year U.S. Treasury yield to its highest level since 2007, a clear rebound in tech stocks centered around Nvidia was observed.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 36.97 points (0.11%) from the previous close to finish at 34,463.69. Meanwhile, the large-cap-focused S&P 500 index rose 30.06 points (0.69%) to 4,399.77, and the tech-heavy Nasdaq index gained 206.81 points (1.56%) to close at 13,497.59.

Within the S&P 500, technology, consumer discretionary, and communication sectors rose, while real estate, utilities, and energy sectors declined. Notably, despite the rise in Treasury yields, technology stocks increased by more than 2%. Palo Alto Networks surged nearly 15% after releasing improved quarterly earnings following last week's market close. Nvidia, which is set to report earnings this week, jumped over 8% as HSBC maintained its buy rating. Tesla also rose more than 7%. Chinese electric vehicle manufacturer Xiaopeng saw nearly a 10% increase after Bank of America (BoA) upgraded its rating to buy. Conversely, AMC dropped nearly 24%, hitting its lowest level this year.

[Image source=Reuters Yonhap News]

Investors are closely watching the final stages of corporate earnings announcements and Treasury yield movements while awaiting major events scheduled for this week. From the 24th to the 26th, the economic symposium known as the "Jackson Hole Meeting" will be held in Wyoming, USA. The event will be attended by Federal Reserve Chair Jerome Powell, European Central Bank (ECB) President Christine Lagarde, central bank governors from various countries, senior officials, and leading economists.

In particular, Chair Powell is scheduled to deliver an economic outlook speech on the second day, the 25th, at 10:05 a.m. Eastern Time. This will be a key opportunity to gauge the direction of monetary policy as the tightening cycle nears its end amid inflation and economic slowdown concerns. The market impact of Powell's remarks is expected to be significant. Last year, stronger-than-expected hawkish comments from Powell triggered a sharp sell-off in the New York stock market immediately afterward.

This year at the Jackson Hole Meeting, Powell is expected to reaffirm a data-dependent stance while leaving the door open for additional rate hikes if necessary. BoA analysts noted in an investor memo that "Powell is likely to emphasize that every (FOMC) meeting is live." Monetary policy directions from not only the Fed but also the ECB and the Bank of Japan (BOJ) are also key points to watch at this Jackson Hole forum.

Ahead of the Jackson Hole Meeting, concerns over additional Fed tightening pushed U.S. Treasury yields higher. In the New York bond market, the 10-year Treasury yield touched 4.35% intraday, marking the highest level since 2007. This is more than 1.4 percentage points above the 20-year average 10-year yield of 2.9%, as compiled by Bloomberg. The 30-year yield also reached 4.45% in afternoon trading, the highest since 2011. The Wall Street Journal (WSJ) reported, "The long-term yield uptrend does not appear to be ending," adding, "The bond weakness (rising yields) was once again led by long-term bonds." The 2-year yield, sensitive to monetary policy, also rose to 4.99%. Bond prices and yields move inversely.

This reflects stronger-than-expected recent economic data, boosting hopes for a soft landing and increasing concerns that the Fed may maintain higher rates longer than anticipated. The U.S. Treasury's increased issuance of government bonds is also exerting upward pressure on long-term yields. Meanwhile, demand for Treasuries is declining. As the Fed's balance sheet reduction continues, major holders such as Japan and China are also selling U.S. Treasuries.

As the benchmark 10-year yield continues its rise, U.S. mortgage rates have surged to their highest level since November 2000. The average 30-year fixed mortgage rate reached 7.48% on the day.

This week, speeches from prominent dovish Fed officials such as Thomas Barkin, President of the Richmond Federal Reserve Bank, and Austan Goolsbee, President of the Chicago Fed, are also scheduled. On the 23rd, the August S&P 500 Global Manufacturing PMI will be released, with attention on whether it will remain below the baseline of 50 for the fourth consecutive month.

The final stages of corporate earnings announcements continue. Nvidia, a key beneficiary of the artificial intelligence (AI) rally, is expected to provide positive momentum for the recently sluggish New York stock market. Most Wall Street analysts forecast that Nvidia's Q2 earnings, to be announced after market close on the 23rd, will exceed market expectations and that Nvidia's stock price will rise further. Major retailers such as Macy's, Nordstrom, Kohl's, and Dollar Tree will also report earnings.

Meanwhile, weak economic data and concerns over defaults among real estate companies in China continue to weigh on investor sentiment. The People's Bank of China cut the loan prime rate (LPR), which effectively serves as the benchmark interest rate, by 0.1 percentage points to 3.45%.

Oil prices declined. On the New York Mercantile Exchange, September delivery West Texas Intermediate (WTI) crude oil closed down 53 cents (0.65%) at $80.72 per barrel.