New York Stock Market Declines Early as Investors Await Powell's Remarks

The three major indices of the U.S. New York stock market are showing a downward trend in the early session within a narrow range as they await remarks from Federal Reserve (Fed) Chair Jerome Powell scheduled for the 9th (local time).

At the New York Stock Exchange (NYSE) around 10:32 a.m. that day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, was trading at around 34,007, down 0.31% from the previous session. The S&P 500, centered on large-cap stocks, was down 0.21% at 4,373, and the Nasdaq, focused on technology stocks, was down 0.16% at 13,628. Until the previous day, the Nasdaq had risen for nine consecutive trading days and the S&P 500 for eight consecutive trading days, but both are under downward pressure today.

Currently, within the S&P 500, energy, industrial, technology, and communication stocks are rising, while healthcare, utilities, consumer goods, and real estate stocks are falling. In particular, healthcare stocks are down more than 1%. Disney is up more than 6% compared to the previous close, buoyed by better-than-expected earnings and cost-cutting plans announced after the previous day's market close. Conversely, MGM Resorts is down over 1% despite better-than-expected earnings. ARM has fallen more than 6% following its first earnings report since listing. AMC Entertainment is down more than 14% after revealing plans for additional stock sales. Nvidia rebounded over 2% due to reports related to AI chips for China.

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Investors are waiting to see what message Chair Powell will deliver about monetary policy when he attends the International Monetary Fund (IMF) conference at 2 p.m. Eastern Time that day. He did not mention this in public appearances the previous day. Matt Maley, Chief Market Strategist at Miller Tabak + Co., said, "It would be interesting if he comments on recent long-term interest rate movements," adding, "If his tone is somewhat more hawkish (favoring monetary tightening) than before, it could act as a catalyst."

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, and Tom Barkin, President of the Richmond Fed, both assessed that the U.S. economy has not yet fully felt the effects of interest rate hikes. The previous day, Fed Governor Michelle Bowman mentioned that additional hikes are necessary to achieve the 2% inflation target. The following day, remarks from Dallas Fed President Lori Logan and President Bostic are scheduled. Goldman Sachs raised its final Fed rate forecast from the previous 3.00%?3.25% range to 3.50%?3.75%.

The weekly unemployment data released before the market opened showed that the number of unemployed Americans who have been jobless for more than two weeks increased for the seventh consecutive week. According to the U.S. Department of Labor, continuing unemployment claims rose by 22,000 to 1,834,000. However, initial claims for unemployment benefits last week were 217,000, down 3,000 from the previous week, below the expert forecast of 220,000 compiled by The Wall Street Journal (WSJ).

Stan Shipley of Evercore ISI pointed out, "The market is quickly accepting the message that the Fed has finished tightening," adding, "The next question for the bond market is what it would take for the Fed to ease."

In the New York bond market, the benchmark 10-year U.S. Treasury yield rose to around 4.56%. The 2-year yield, which is sensitive to monetary policy, is trading around 4.96%. The Treasury's 10-year bond auction, which attracted attention the previous day, was considered to have been conducted at a solid level. The 10-year issuance yield was 4.519%, the six-month average level. A 30-year bond auction is scheduled for the afternoon.

Currently, the market largely expects a rate hold in December following November. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market currently reflects over a 90% probability that the Fed will keep rates steady at 5.25%?5.5% at the next meeting. The probability of a baby step hike is around 9%. This indicates that despite expectations of prolonged high rates, the likelihood of an immediate rate hike is low.

The dollar index, which measures the value of the U.S. dollar against the currencies of six major countries, is trading around 105.5, within a narrow range. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s "fear gauge," rose more than 2% to 14.7.

European stock markets are rising. Germany’s DAX index is up 0.51%. The UK’s FTSE index is up 0.59%, and France’s CAC index is up 0.91%.