[New York Stock Market] Fed Gradualism and Economic Soft Landing Expectations Lead to Slightly Higher Close

The major indices of the U.S. New York stock market closed with a slight gain. This is interpreted as reflecting expectations for a soft landing of the U.S. economy as the Federal Reserve (Fed) maintained a cautious stance on monetary policy.

[Image source=Yonhap News]

On the 17th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,947.28, up 0.01% (1.81 points) from the previous day. The Standard & Poor's 500 (S&P 500) index rose 0.13% (5.78 points) to 4,514.02, and the Nasdaq index closed at 14,125.48, up 0.08% (11.81 points).

The New York stock market showed an upward trend for three consecutive weeks. The S&P 500 and Nasdaq indices rose more than 2% over the past week, while the Dow increased by about 1.9%. The S&P 500 recorded its highest level since August 30, showing gains for four consecutive trading days. The Nasdaq also rose for four consecutive trading days, reaching its highest closing level since August 1.

By sector, six out of the 11 S&P 500 sectors rose. The energy sector increased 2.12% from the previous day, supported by rising oil prices. However, communication services recorded the largest decline, falling 0.47%. Additionally, financials, industrials, materials, and utilities indices rose, while healthcare, real estate, technology, and communication indices closed lower.

Looking at individual stocks, apparel company Gap's shares rose more than 30% compared to the previous day, likely due to better-than-expected earnings. On the other hand, ChargePoint, an electric vehicle charging station company with poor earnings, saw its stock drop more than 35%. Technology stocks showed mixed trends. Amazon.com rose by over 1%, while Alphabet A, Google's parent company, fell by over 1%. Nvidia also showed a downward trend.

The slowed inflation rate in the U.S. is seen as a positive factor for the stock market. According to the Chicago Mercantile Exchange (CME) FedWatch on the day, participants in the federal funds (FF) futures market estimated a 100% probability that the Fed will keep the benchmark interest rate unchanged next month and in January next year. Fed Vice Chair Michael Barr said that the benchmark interest rate has likely reached its peak. The U.S. 10-year Treasury yield briefly fell below 4.4% on the day, hitting a low near 4.38%, the lowest level since the end of September.

However, cautious views are being raised, pointing to uncertainties in monetary policy. Mary Daly, President of the Federal Reserve Bank of San Francisco, said at the European Banking Congress held in Frankfurt, Germany, "When uncertainty is high and risks to the target are balanced, it is necessary to practice gradualism." Additionally, Susan Collins, President of the Federal Reserve Bank of Boston, said in an interview, "Further tightening is not off the table," adding, "It is difficult to say with certainty that high inflation has been overcome."