[New York Stock Market] Mixed Close Amid Rising Oil Prices and Treasury Yields

The three major indices of the U.S. New York stock market closed mixed on the 27th (local time) amid rising Treasury yields and crude oil prices. In the New York bond market, the benchmark 10-year Treasury yield surpassed 4.61%, marking the highest level since 2007. International crude oil prices also jumped more than 3%, hitting a yearly high.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, composed of blue-chip stocks, closed at 33,550.27, down 68.61 points (0.20%) from the previous session. Meanwhile, the large-cap-focused S&P 500 index rose 0.98 points (0.02%) to 4,274.51, and the tech-heavy Nasdaq index gained 29.24 points (0.22%) to close at 13,092.85.

Within the S&P 500, energy, industrial, communication, and technology sectors rose, while utilities, real estate, and healthcare sectors declined. Notably, energy stocks surged over 2% due to the rise in international crude oil prices. Devon Energy and Marathon Oil both posted gains exceeding 4%. Costco rose about 2% after releasing earnings that beat expectations following the previous day's close. Micron ended slightly higher ahead of its quarterly earnings announcement. Tesla slipped 1.47%, and Apple fell 0.89%.

[Image source=Reuters Yonhap News]

Investors closely monitored Treasury yields, crude oil movements, and the possibility of a U.S. federal government shutdown. The previous day, all three major indices closed lower amid concerns over prolonged high interest rates and rising Treasury yields. Accordingly, despite the rise in Treasury yields and crude oil prices on this day, some rebound buying was observed in the market.

Greg Bassuk, CEO of AXS Investments, said, "Inflation remains a major concern," adding, "Investors are worried not only about interest rate hikes but also about the impact of high borrowing costs on companies." He predicted that market volatility would continue over the coming weeks.

Treasury yields continued their upward trend on this day. The 10-year yield surpassed 4.61%, the highest since 2007. The 2-year yield, which is sensitive to monetary policy, also rose to 5.13%. The dollar index, which measures the value of the U.S. dollar against the currencies of six major countries, exceeded 106.8 during the session, marking its highest level since November last year.

Crude oil prices hit yearly highs again amid renewed concerns over supply shortages following reports of declining U.S. crude inventories. On the New York Mercantile Exchange, November delivery West Texas Intermediate (WTI) crude oil closed at $93.68 per barrel, up $3.29 (3.64%) from the previous session. This is the highest level since August 29, 2022. The daily gain was the largest since May 5 of this year. November Brent crude also rose 2.8% to $96.55 per barrel.

U.S. durable goods orders (products expected to last three years or more) unexpectedly increased in the latest report. According to the Commerce Department, August durable goods orders rose 0.2% month-over-month to $284.7 billion, contrary to Wall Street expectations of a 0.5% decline. However, such stronger-than-expected data is seen as a factor that could increase expectations for Fed tightening. Previously, the Fed held rates steady at the September FOMC meeting but signaled additional rate hikes within the year and raised rate projections for next year and the year after on the dot plot.

Fed Chair Jerome Powell is scheduled to participate in an online town hall meeting the following day. John Williams, President of the Federal Reserve Bank of New York and considered the Fed’s third most influential figure, will speak on the 29th. Market watchers are keen to see whether their comments on monetary policy will lead to further rises in Treasury yields. On the 29th, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, will be released. Wall Street expects the PCE inflation rate to ease to around 3.9% year-over-year.

Meanwhile, investors are also paying attention to the risk of a U.S. federal government shutdown. To avoid a shutdown, Congress must pass a budget before October 1, when the 2024 fiscal year begins, but hardline Republicans are blocking even temporary budget measures, resulting in a deadlock. Earlier, Moody’s, one of the world’s top three credit rating agencies, warned that a shutdown could negatively impact the U.S. national credit rating.

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said in a CNN interview, "A government shutdown or an auto strike could slow the economy," adding, "If such downside scenarios affect the economy, monetary policy might need to be less restrictive to bring inflation back to 2%."