[New York Stock Market] Rise on Tech Stock Strength... Monitoring FOMC

NVIDIA, Apple, Alphabet and Other Tech Stocks Rise
Strong Treasury Yields...Oil Prices Surge 2%
Focus on FOMC Meeting on 19-20

The three major indices of the U.S. New York stock market all closed higher on the 18th (local time). Technology stocks, including Nvidia, which held an artificial intelligence (AI) developer conference that day, as well as Apple and Alphabet, pushed the market up. However, with expectations for interest rate cuts fading, bond yields rose, which could potentially limit the market's upward momentum going forward. Investors' attention is focused on the Federal Open Market Committee (FOMC) monetary policy meeting scheduled for the 19th and 20th.

On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 75.66 points (0.2%) from the previous trading day to close at 38,790.43. The large-cap-focused S&P 500 index gained 32.33 points (0.63%) to 5,149.42, and the Nasdaq index jumped 130.27 points (0.82%) to close at 16,103.45.

Jensen Huang, CEO of NVIDIA

By stock, Nvidia rose 0.7% on the opening day of its developer event, the 'Graphics Processing Unit Technology Conference (GTC) 2024.' At the event, Nvidia unveiled next-generation AI chips and software. Wall Street also raised Nvidia's target price ahead of the GTC. William Stein of Truist saw an additional 34% upside potential for Nvidia.

Apple jumped 0.64% on news that it is discussing integrating Google's AI chatbot Gemini into the iPhone. Alphabet, Google's parent company, also rose 4.44%. Super Micro Computer fell 6.38% on its first day included in the S&P 500 index.

Jay Hatfield, founder and CEO of InfraCap, analyzed, "Today's direction is a shift toward technology," adding, "We are in a seasonally vulnerable period, and people don't know what to do. They are alternating between selling technology stocks and other market stocks." He predicted that the market rally would resume in April when the earnings season begins.

Due to sticky inflation, expectations for the timing of the first interest rate cut may be delayed, causing bond yields to rise slightly. The U.S. 10-year Treasury yield, a global bond yield benchmark, is trading around 4.33%, up 2 basis points (1bp = 0.01 percentage points) from the previous trading day. The 2-year U.S. Treasury yield rose 1bp to 4.73%, marking the highest level in four months since late November last year. If bond yields continue to rise, the stock market's gains could be limited.

[Image source=Yonhap News]

Market attention is now focused on the FOMC meeting held over two days starting on the 19th. At this second meeting of the year, the U.S. Federal Reserve (Fed) is expected to maintain the benchmark interest rate at the current 5.25?5.5% level. The key issue is whether the Fed will revise the dot plot, which shows economic and interest rate forecasts. Previously, at the December FOMC meeting last year, the Fed projected the median federal funds rate for this year to be 4.5?4.75%, anticipating three 0.25 percentage point rate cuts over the year. It also forecasted an additional 1 percentage point cut in 2025. However, with inflation proving stronger than expected since the beginning of the year, some speculate that the Fed may reduce the number of rate cuts this year from three to two.

Goldman Sachs has lowered its forecast for the number of Fed rate cuts this year from four to three. This follows a revision last month from five cuts to four, with another downward adjustment this month.

The message Fed Chair Jerome Powell delivers at the press conference immediately following the FOMC meeting is also expected to provide hints about the future path of interest rates. Attention is particularly focused on Powell's assessment of the current inflation situation.

According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on this day reflects a 52.1% probability that the Fed will cut rates by 0.25 percentage points at the June FOMC meeting. This is down from 58.9% the previous day and 71.7% a week ago.

Quincy Crosby, Chief Global Strategist at LPL Financial, said, "This week's Fed meeting could determine the market direction," adding, "Especially if the Fed signals that rates need to remain stable for a longer period."

Win Tin and Elias Hadad of Brown Brothers Harriman described it as "a week packed with central bank meetings," noting, "Because there will be some surprises, today's calm could lead to greater volatility ahead."

Additionally, on the 20th, U.S. semiconductor company Micron will release its earnings report.

International oil prices are on the rise. Reduced exports from Iraq and Saudi Arabia, along with increased demand forecasts from the U.S. and China, have pushed prices higher. West Texas Intermediate (WTI) crude oil rose $1.68 (2.1%) to $82.72 per barrel, and Brent crude increased $1.55 (1.8%) to $86.89 per barrel.