[New York Stock Market] Rises on Interest Rate Cut Expectations... Nasdaq Up 1.19%

New York Fed President "Expecting Interest Rate Cut"
This Week's Fed Officials' Remarks, Disney and Uber Earnings Preview
International Oil Prices Rise Amid Israel-Hamas Ceasefire Disagreement

The three major indices of the U.S. New York stock market closed higher on the 6th (local time). Investor sentiment recovered as expectations for interest rate cuts were revived following remarks from Federal Reserve (Fed) officials, amid indicators released last week suggesting a cooling in the hot labor market.

On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 176.59 points (0.46%) from the previous trading day to close at 38,852.27. The large-cap-focused S&P 500 index increased by 52.95 points (1.03%) to 5,180.74, and the tech-heavy Nasdaq index jumped 192.92 points (1.19%) to finish at 16,349.25.

By individual stocks, Berkshire Hathaway, led by the "Oracle of Omaha" Warren Buffett, rose 1.01%. Berkshire Hathaway, which held its annual shareholders meeting on the 4th, announced that its operating profit for the first quarter increased by 40% compared to the same period last year. Apple, praised as a good company by Buffett at the annual shareholders meeting, fell 0.91%. Buffett explained that he sold 13% of his Apple shares held in the first quarter this year due to tax-related reasons. Micron surged 4.73% after investment firm Baird upgraded its investment rating from "neutral" to "outperform market."

On the day, John Williams, president of the Federal Reserve Bank of New York, attending the "Milken Global Conference 2024" held at the Beverly Hilton Hotel in Los Angeles (LA), said, "Current monetary policy is in a very good position," and added, "I expect the benchmark interest rate to be cut." However, he noted, "We are looking at all the data," indicating that future monetary policy decisions will be based on incoming indicators. This message aligns with Fed Chair Jerome Powell's remarks on the 1st, which dismissed the possibility of a rate hike.

Thomas Barkin, president of the Federal Reserve Bank of Richmond, said on the same day, "I am optimistic that the current restrictive interest rate level can suppress demand and bring inflation back to target levels." He also explained that due to the strong labor market, Fed officials need to wait longer.

Sam Stovall, Chief Investment Strategist at CFRA, said last week that after Chair Powell dismissed the possibility of a rate hike, "Many investors breathed a sigh of relief," adding, "It looks like the market is saying the bear market is over. We like to see some kind of continuation."

The labor market slowdown indicators released last week also stimulated investor sentiment. According to the April employment report released by the U.S. Department of Labor on the 3rd, nonfarm payrolls increased by 175,000 compared to the previous month, significantly below the expert forecast of 240,000 compiled by Dow Jones. The unemployment rate rose 0.1 percentage points to 3.9%, and the weekly wage growth rate slowed to 0.2% compared to the previous month.

Bill Adams, chief economist at Comerica Bank, analyzed, "Since the Fed is still maintaining rates at restrictive levels, it is somewhat premature to declare that the U.S. economy has achieved a soft landing," but added, "However, the April employment report helps clarify the path to the destination."

This week, remarks from Fed officials will continue. Following the statements from Presidents Williams and Barkin on the day, speeches are scheduled from Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, on the 7th, and from Michelle Bowman, Fed governor, and Michael Barr, Fed vice chair for supervision, on the 10th.

Corporate earnings reports are also supporting the stock market. According to Bloomberg Intelligence, over 80% of companies included in the S&P 500 index have reported first-quarter earnings, with earnings growth exceeding expectations.

Emmanuel Ker, from investment bank Barclays, analyzed, "First-quarter earnings rebounded with the help of profits," adding, "Overall earnings resilience is likely to limit downward pressure on stocks."

Government bond yields are moving within a narrow range. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 1 basis point (1 bp = 0.01 percentage points) from the previous trading day to 4.48%, while the 2-year Treasury yield, sensitive to monetary policy, rose 2 basis points to 4.83%.

International oil prices rose on news that Israel and the Palestinian armed group Hamas showed differences over a Gaza ceasefire plan. West Texas Intermediate (WTI) crude oil closed at $78.48 per barrel, up $0.37 from the previous trading day, and Brent crude, the global oil price benchmark, rose $0.37 to close at $83.33.