[New York Stock Market] Falling Ahead of February PCE Inflation... Truth Social Up 16.1%

Pause After FOMC Rally
Focus on February PCE Price Index Released on 29th

The three major indices of the U.S. New York stock market all closed lower on the 26th (local time). After a pause due to concerns over the high levels, a rebound buying wave emerged early in the session, but the market failed to find clear upward momentum. Investors are awaiting the release of the February Personal Consumption Expenditures (PCE) price index scheduled for the 29th.

On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average fell 31.31 points (0.08%) from the previous trading day to close at 39,282.33. The large-cap S&P 500 index dropped 14.61 points (0.28%) to 5,203.58, and the tech-heavy Nasdaq index declined 68.77 points (0.42%) to close at 16,315.7.

By individual stocks, Nvidia fell 2.53%. Truth Social's parent company, Trump Media & Technology Group (TMGT), a social networking service (SNS) founded by former U.S. President Donald Trump, surged 16.1% on its first day of listing. U.S. food company McCormick rose 10.52% on strong first-quarter earnings. Seagate Technology, upgraded to 'overweight' by Morgan Stanley, gained 7.38%. Krispy Kreme soared 39.36% on news of expanding cooperation with McDonald's. Tesla jumped 2.92%.

[Image source=Yonhap News]

Last week, the New York stock market hit an all-time high after the Federal Reserve (Fed) maintained its forecast for three rate cuts this year following the Federal Open Market Committee (FOMC) meeting on the 20th. Since then, the market has been adjusting downward amid concerns over the high levels.

There are various views on the future market outlook. Marco Kolanovic of JP Morgan Chase said, "For stocks to continue rising in the coming months, global central banks need to ease monetary policy this year, and companies must achieve healthy earnings growth." He added, "If earnings disappoint and central banks become more restrictive, stocks should decline."

Warren Peace, co-founder of 3Potin Research, said, "Despite concerns that the market rally has entered overbought territory, investors currently cannot reduce their exposure." He explained, "There are still many with low stock allocations, and they will move quickly to increase market exposure." He added, "A combination of a soft landing, a supportive Fed, and strategists and institutions lacking investment means this rally could continue."

Fed officials have differing opinions on the future interest rate path, a key variable influencing the market trend. On the previous day, Austan Goolsbee, president of the Federal Reserve Bank of Chicago, forecasted three rate cuts this year, in line with the FOMC consensus. In contrast, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, reaffirmed his previous outlook of only one rate cut this year. Amid this, the market is awaiting further remarks from Fed officials this week to gauge the future rate path. Speeches by Fed Governor Christopher Waller on the 27th and Fed Chair Jerome Powell on the 29th are scheduled.

Durable goods orders in the U.S. for February, released on the day, rose 1.4% month-over-month. This not only marked a turnaround from January's -6.9% but also exceeded market expectations of 1.2%. The increase in durable goods orders last month, the first in three months, is spreading optimism about the economy.

The market is focusing on the February core Personal Consumption Expenditures (PCE) price index, to be released on the 29th, as the most important indicator this week. The February core PCE price is expected to rise 0.3% month-over-month, a smaller increase than January's 0.4%. However, the annual increase is expected to remain at 2.8%, the same level as January. Since the Consumer Price Index (CPI) exceeded experts' expectations for two consecutive months in January and February this year, the trend of PCE prices is being closely watched. However, since the 29th is Good Friday, a holiday before Easter, market reactions to the inflation data are likely to be confirmed after the New York stock market opens on the 1st of next month.

Government bond yields are moving in a narrow range. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 2 basis points (1bp=0.01 percentage point) to 4.23%, while the 2-year Treasury yield, sensitive to monetary policy, traded near 4.58%, similar to the previous day.

International oil prices are declining. West Texas Intermediate (WTI) crude fell $0.33 to $81.62 per barrel, and Brent crude dropped $0.50 to $86.25 per barrel.