[New York Stock Market] Fed Hawkish Remarks and Rising Middle East Tensions Lead to Broad Declines

The three major U.S. stock indices closed lower on the 4th (local time). Federal Reserve (Fed) senior officials repeatedly made 'hawkish' remarks, and geopolitical risks in the Middle East caused all three major indices to fall by more than 1%.

At the New York Stock Exchange (NYSE) that day, the blue-chip-focused Dow Jones Industrial Average closed at 38,596.98, down 530.16 points (1.35%) from the previous trading day. The large-cap-focused S&P 500 index ended at 5,147.21, down 64.28 points (1.23%). The tech-heavy Nasdaq index closed at 16,049.08, down 228.38 points (1.4%).

The Dow index fell for the fourth consecutive trading day. The decline on this day was the largest so far this year.

By stock, semiconductor shares showed a downward trend. Nvidia fell 3.44%, and AMD plunged 8.26%. Intel, which reported an operating loss in its foundry division on the 2nd, fell 1.49% following the previous day.

Tesla rose 1.62%. Ford Motor fell 3.22% on news of delaying the launch of a new electric vehicle.

Sector indices all declined.

Sam Stovall, Chief Investment Strategist at CFRA Research, said, "Currently, investors are taking a wait-and-see attitude," adding, "The 10-year Treasury yield is a key factor confirming concerns that the Fed has no plans to rush to cut rates." He also noted, "Considering the S&P 500 is trading at a 33% premium compared to its long-term average, the market is still expensive," adding, "It is only a matter of time before some of the gains in the index are digested."

Market sentiment quickly cooled following Fed officials' remarks that rate cuts may be difficult this year. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said that day, "If inflation remains stubborn, it is questionable whether the Fed should cut rates."

Tom Barkin, President of the Richmond Fed, said, "It is wise for the Fed to take its time," adding, "No one wants inflation to reappear."

The market is watching the March employment report scheduled for release tomorrow. Nonfarm payrolls are expected to increase by 200,000, and the unemployment rate is forecasted at 3.8%. If the labor market remains strong, the possibility of rate cuts diminishes.

The weekly initial jobless claims, seasonally adjusted, recorded 221,000, an increase of 9,000 from the previous week. Although claims increased, they remained in the low 200,000s, indicating a robust employment market.

Geopolitical risks in the Middle East also affected stock prices. Iran pointed to Israel as behind the bombing of the Iranian consulate in the Syrian capital and warned of strong retaliation.

In the New York bond market, Treasury yields fell. The 10-year Treasury yield hovered around 4.3%, while the 2-year yield moved around 4.6%.

As tensions in the Middle East escalated, international oil prices reached their highest levels since October last year. West Texas Intermediate (WTI) crude oil closed at $86.59 per barrel, up $1.16 (1.36%) from the previous trading day. Brent crude closed at $90.65 per barrel, up $1.30 (1.45%) from the previous day.