New York Stock Market Rises on Rebound Buying... Nasdaq Up 0.46%

Powell Reaffirms Caution by Attending House Hearing
February Private Sector Job Growth Falls Short of Market Expectations

The three major indices of the U.S. New York stock market are all rising in early trading on the 6th (local time). After the stock market fell for two consecutive days, a rebound buying spree flowed in. Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), appeared before the House of Representatives on the day and reaffirmed a cautious stance that while a rate cut within the year is appropriate, additional evidence of inflation slowdown is needed.

As of 10:22 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was trading at 38,744.56, up 0.41% from the previous trading day. The S&P 500 index, centered on large-cap stocks, rose 0.51% to 5,104.39, and the Nasdaq index, focused on technology stocks, was up 0.46% at 16,012.21.

By stock, U.S. cybersecurity firm CrowdStrike surged 16.11% on strong earnings. U.S. big data company Palantir Technologies jumped 4.07% on news of a supply contract with the U.S. military. U.S. retailer Nordstrom fell 14.02% after warning of weak sales this year. Foot Locker, a footwear company, dropped 25.94% due to a poor earnings outlook for this year.

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The market closely watched Chairman Powell’s remarks at the semiannual monetary policy report to the House Financial Services Committee on the day.

Chairman Powell said that while a rate cut within the year is appropriate, "a rate cut is not guaranteed until there is greater confidence that inflation is moving toward the 2% target." He added, "If policy restrictions are eased too early or too much, inflation progress could be reversed, and if policy restrictions are eased too late or too little, economic activity and employment could be excessively weakened," warning against both early rate cuts and prolonged excessive tightening.

He reaffirmed the existing stance that a rate cut within the year is appropriate. He said, "We view the policy rate as having peaked in this tightening cycle," and "If the economy broadly progresses gradually as expected, it will be appropriate to reverse policy restraint at some point this year."

David Russell, Global Chief Market Strategist at TradeStation, said, "Investors are still in a wait-and-see mode," and evaluated, "Powell’s remarks contained neither new nor good news. He confirmed the market’s preference for rate cuts while emphasizing the potential risks if cuts do not occur."

Additionally, before the market opened on the day, February employment data was also released. According to the U.S. employment report released by ADP, a U.S. private labor market research firm, private sector new job creation in February was 140,000, below the market expectation of 149,000. However, the increase was larger than January’s 111,000, indicating that the employment market remains robust. Wages for workers who have been at the same job for the past 12 months rose 5.1% year-on-year, the smallest increase since August 2021.

Nela Richardson, ADP’s Chief Economist, said, "The pace of job growth remains solid," and "Although wage growth has slowed, it still exceeds inflation." She added, "The labor market is dynamic, but it is not at a level that would change the Federal Reserve’s rate decisions this year."

The ADP report was released ahead of the February employment report to be announced by the U.S. Department of Labor on the 8th. To more accurately assess the employment market situation, the official government report should be reviewed.

Government bond yields are falling. The U.S. 10-year Treasury yield, a global bond yield benchmark, is moving down to 4.09%, and the 2-year Treasury yield, sensitive to monetary policy, is down to 4.53%.

International oil prices are rising on Powell’s remarks about plans for a rate cut within the year. West Texas Intermediate (WTI) crude oil rose $1.40 (1.79%) to $79.55 per barrel, and Brent crude oil increased $1.04 (1.27%) to $83.08 per barrel.