[New York Stock Market] Closed Higher on Declines in Treasury Yields and Oil Prices... Nasdaq Up 0.83%

The three major indices of the U.S. New York stock market all closed higher on the 28th (local time) as bond yields and oil prices, which had recently surged, declined, triggering a rebound buying spree.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, composed of blue-chip stocks, closed at 33,666.34, up 116.07 points (0.35%) from the previous session. The S&P 500, focused on large-cap stocks, rose 25.19 points (0.59%) to 4,299.70, and the tech-heavy Nasdaq index closed up 108.43 points (0.83%) at 13,201.28.

Within the S&P 500, all 10 sectors except utilities rose. Major tech stocks such as Tesla (+2.44%), Nvidia (+1.46%), Google Alphabet (+1.36%), and Meta Platforms (+2.09%) showed gains. AMD jumped nearly 5%. On the other hand, Micron fell more than 4% after releasing earnings guidance below expectations. GameStop dropped nearly 2% following news of Ryan Cohen's appointment as CEO.

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Investors closely watched bond yields, oil price movements, economic indicators, and the looming possibility of a federal government shutdown. Recently, long-term bond yields have continued to rise amid expectations that high interest rates in the U.S. may persist for an extended period. The 10-year U.S. Treasury yield even surpassed 4.68% the previous day.

However, the 10-year yield, which had been rising until the morning, fell to around 4.57% in the New York bond market. The 2-year yield, sensitive to monetary policy, also dropped to about 5.06%, supporting a recovery in investor sentiment. Case Runner, co-chief investment officer at Truist Advisory Services, analyzed, "The market is realizing that the 10-year Treasury yield is beginning to stabilize."

The weekly initial jobless claims released that day increased compared to the previous week but fell short of Wall Street expectations. According to the Department of Labor, last week's claims rose by 2,000 to 204,000. Wall Street had anticipated 214,000 claims. On the same day, the U.S. second-quarter GDP growth rate was finalized at an annualized 2.1%, matching the preliminary estimate.

Investors are also paying attention to the risk of a U.S. federal government shutdown. A shutdown occurs if Congress fails to pass a budget before the start of the 2024 fiscal year on October 1. As the possibility of a shutdown grows due to congressional deadlock, U.S. government agencies have reportedly begun providing federal employees with guidelines on work procedures in the event of a shutdown.

If a shutdown materializes, it will inevitably impact the U.S. economy. Consumption is expected to contract, especially among federal employees placed on unpaid leave, and delays or suspensions in the release of key economic indicators will increase uncertainty surrounding monetary policy. Minneapolis Fed President Neel Kashkari said in a foreign media interview the previous day, "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%." Earlier, 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.

Republican House Speaker Kevin McCarthy appeared on CNBC that morning, criticizing the short-term budget plan prepared by the Senate but expressed confidence that an agreement would ultimately be reached to prevent a shutdown. Historically, the U.S. Congress has experienced two shutdowns. The most recent shutdown lasted up to five weeks at the end of 2018 during the Trump administration due to a congressional standoff over border wall funding.

The following day, the Federal Reserve's preferred inflation gauge, the August Personal Consumption Expenditures (PCE) price index, will be released. Wall Street expects the PCE increase to moderate to around 3.9% year-over-year.

Oil prices fell for the first time in three trading days. On the New York Mercantile Exchange, November delivery West Texas Intermediate (WTI) crude oil closed at $91.71 per barrel, down $1.97 (2.10%) from the previous day. Prices briefly surpassed $95 per barrel during the session but then retreated amid profit-taking selling pressure.