[New York Stock Market] Rise on Powell's Remarks... Dow Surpasses 36,000, S&P 500 Hits Year-to-Date High

New York Stock Market's 3 Major Indexes Close Higher

Remarks by Jerome Powell, Chair of the U.S. Federal Reserve (Fed), raised expectations for interest rate easing, leading to gains in the three major indices on the New York Stock Exchange.

Santa Claus appearing at the New York Stock Exchange in the United States / Photo by Yonhap News

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 36,245.50, up 294.61 points (0.82%) from the previous session. The Dow surpassed 36,000 for the first time since January last year.

The Standard & Poor's (S&P) 500 index rose 26.83 points (0.59%) to close at 4,594.63, while the Nasdaq index ended the day at 14,305.03, up 78.81 points (0.55%) from the previous session. These are the highest closing levels since March last year and July this year, respectively.

Although Chair Powell made balanced remarks to temper market expectations of interest rate cuts, the market interpreted them more as dovish signals, triggering a relief rally in the stock market.

During a discussion with Helen Gail, president of Spelman College in Atlanta, Georgia, Powell said, "It is too early to confidently conclude that we have achieved a sufficiently restrictive stance, and likewise, it is premature to forecast when policy will be eased." He added, "We are prepared to tighten policy further if we judge it appropriate," leaving the door open for additional tightening.

Despite these remarks, the financial market believes that the U.S. is unlikely to pursue further rate hikes. Even after Powell's comments, the probability of the first rate cut occurring in March next year has risen to over 60%. The financial market has begun pricing in up to a 1.25 percentage point rate cut next year.

The U.S. is scheduled to make its final rate decision of the year on the 13th. Prior to that, employment data (December 8) and inflation data (December 12) for November will be released. If these indicators show a faster-than-expected slowdown, the likelihood of declaring an end to rate hikes this month will increase.

Anthony Saglimbene, Market Strategist at Ameriprise Financial, told MarketWatch, "I think investors are confident about the possibility of a soft landing," adding, "This means the hard landing scenario is being removed from consideration."

Meanwhile, the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 0.29 points (2.24%) to 12.63 compared to the previous session.