The three major indices of the U.S. New York stock market showed a unified decline in the early session on the 26th (local time) due to prolonged high interest rate outlooks and weak economic indicators.
At around 10:05 a.m. at the New York Stock Exchange, the Dow Jones Industrial Average was trading at around 33,802, down 203.92 points (0.60%) from the previous close. The S&P 500 index was at 4,298, down 38.64 points (0.89%), and the Nasdaq index was at 13,128, down 142.90 points (1.08%).
Currently, all 11 sectors in the S&P 500 are in decline. In particular, telecommunications, technology, consumer discretionary, utilities, and real estate-related stocks are showing losses exceeding 1%. Fisker jumped nearly 15% from the previous close after Bank of America (BoA) upgraded its investment rating. The company announced plans to increase daily deliveries of ocean vehicles to 300 units. DraftKings and Barclays also rose over 3% as JP Morgan and Morgan Stanley upgraded their investment ratings, respectively. On the other hand, Tesla fell nearly 1% following foreign media reports that the European Union (EU) is launching an investigation related to exports to China. Major tech stocks such as Amazon (-3.2%), Apple (-1.93%), and Google Alphabet (-2.56%) also showed broad weakness. Bank stocks, including Wells Fargo and Morgan Stanley, also declined by more than 1%.
Investors are closely watching movements in Treasury yields, the dollar, oil prices, the possibility of a U.S. federal government shutdown, and economic indicators amid ongoing concerns about prolonged high interest rates and tightening measures. In the New York bond market, the 10-year U.S. Treasury yield is currently around 4.52%. Although slightly lower than the previous day’s record high since 2007, it remains at a high level. The 2-year yield, which is sensitive to monetary policy, stands at 5.12%. The dollar index, which measures the value of the dollar against six major currencies, has surpassed the 106 level.
Sam Stovall, Chief Investment Strategist at CFRA, said, "Investors remain uneasy about the impact of rising Treasury yields on the economy, the stock market, the Federal Reserve (Fed), and the value of the dollar," adding, "The lack of clarity seems to have somewhat eased their minds."
The risk of a U.S. federal government shutdown also persists. To prevent a shutdown, Congress must pass a budget before October 1, when the 2024 fiscal year begins, but a deadlock remains. Hardliners within the House Republican majority, who hold the authority to review the budget bill, are demanding large-scale cuts. Yesterday, Moody’s, one of the world’s top three credit rating agencies, warned that a shutdown would negatively affect the U.S. national credit rating.
Key economic indicators released today, including home sales and consumer confidence, were weak. According to the Commerce Department, new home sales in August fell 8.7% month-over-month to 675,000 units, below Wall Street’s forecast of 695,000 units. The Conference Board’s September consumer confidence index also came in at 103, below both the previous month’s 108.7 and the market forecast of 105.5. Particularly concerning is the expectations index, which dropped to 73.7, indicating recession-level sentiment. On the other hand, the Richmond Federal Reserve Bank’s September manufacturing index recorded 9, surpassing the previous month’s -7 and the forecast of -5.5.
September is typically considered a weak month for the New York stock market. The Nasdaq index has fallen more than 6% so far this month. The S&P 500 and Dow Jones indices have also declined by about 4% and 2%, respectively. Jamie Dimon, chairman of JP Morgan Chase and known as the "Emperor of Wall Street," supported the bearish market by stating yesterday that interest rates might need to be raised further to curb inflation. He reiterated similar remarks in an interview with The Times of India this morning.
This week, remarks from Fed officials and major economic data releases are expected. Fed Chair Jerome Powell will speak at an online town hall meeting on the 28th. John Williams, president of the New York Fed and considered the Fed’s third-ranking official, will speak on the 29th. Additionally, the final figures for second-quarter GDP, personal consumption expenditures (PCE), and the University of Michigan consumer sentiment index are scheduled for release this week.
European stock markets are also declining today. Germany’s DAX index fell more than 1% from the previous close. France’s CAC index also dropped around 1%. The UK’s FTSE index is trading slightly lower.
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