[New York Stock Market] Slight Gains Amid Signs of Cooling Job Market... Naver Webtoon Up 10%

US Continued Unemployment Claims Reach Highest in 31 Months
Q1 GDP Finalized at 1.4%, Up 0.1%P
May PCE Inflation to Be Announced on 28th

The three major indices of the U.S. New York stock market closed slightly higher on the 27th (local time). As signs of a slowdown in the labor market were confirmed, investor sentiment improved, and the market gauged investment direction while awaiting the release of the Personal Consumption Expenditures (PCE) price index on the 28th. Webtoon Entertainment, which was listed on the Nasdaq market that day, rose nearly 10%, marking a successful debut.

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On that day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 39,164.06, up 36.26 points (0.09%) from the previous trading day. The S&P 500, focused on large-cap stocks, rose 4.97 points (0.09%) to 5,482.87, and the Nasdaq, centered on technology stocks, ended trading at 17,858.68, up 53.53 points (0.3%).

By individual stocks, Webtoon Entertainment, the parent company of Naver Webtoon, rose 9.52% on its first day of Nasdaq listing. U.S. semiconductor company Micron fell 7.12%. Selling pressure continued after it released fourth-quarter fiscal year revenue forecasts that met market expectations. Levi's dropped 15.51% following disappointing quarterly earnings. Although 31 major U.S. banks passed the Federal Reserve's stress tests assuming a recession scenario, Goldman Sachs fell 2.17%. JP Morgan Chase rose 0.88%. Amazon, which surpassed a market capitalization of $2 trillion for the first time ever the previous day, rose 2.19%.

The U.S. Department of Commerce announced that the finalized first-quarter Gross Domestic Product (GDP) recorded an annualized rate of 1.4% compared to the previous quarter. This was an upward revision of 0.1 percentage points from the preliminary figure (1.3%) released last month.

Signs of a slowdown appeared in the labor market. According to the U.S. Department of Labor, the number of continuing unemployment claims, which are claims for unemployment benefits filed for at least two consecutive weeks, was 1,839,000 for the week of June 9-15. This was an increase of 18,000 from the previous week's revised figure of 1,821,000 and the highest level since November 2021. New unemployment claims for the week of June 16-22 were 233,000, slightly below the expert forecast of 236,000. The increase in continuing unemployment claims is interpreted as a signal that the labor market is slowing down.

Jeff Roach, Chief Economist at LPL Financial, said, "The slight increase in continuing unemployment claims, reaching the highest level since late 2021, is sending a warning signal that the labor market may be slowing down," adding, "Consumer and business activities will both slow down in the second half of 2024, providing the Fed with ample opportunity to start cutting interest rates in the latter half of this year."

Market attention is focused on the May PCE price index to be released the next day. With both the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation rates easing last month, the PCE inflation is also expected to slow down. The market expects the May core PCE price index to rise 0.1% month-over-month and 2.6% year-over-year, both lower than the previous month's figures (0.2% and 2.8%, respectively). If the slowdown in the PCE inflation, the Fed's most closely watched indicator, is confirmed, it will add another basis for interest rate cuts and is expected to drive stock market gains.

The market is reflecting expectations of one to two interest rate cuts within the year. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on that day priced in a 64.1% chance that the Fed will cut rates by at least 0.25 percentage points at the September FOMC meeting. The probability of a 0.25 percentage point or more cut in November is 77.3%.

Brian Levitt, Global Market Strategist at Invesco, analyzed, "We are currently in an environment somewhat synchronized with the Fed," adding, "What you need is the inflation story behind us, the Fed being able to cut rates, and greater expectations in the market that a soft landing will occur."

U.S. Treasury yields declined. The 10-year U.S. Treasury yield, a global bond yield benchmark, fell 2 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.28%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, dropped 3 basis points to 4.71%.

International oil prices rose. West Texas Intermediate (WTI) crude oil increased $0.84 (1.04%) from the previous trading day to $81.74 per barrel, and Brent crude, the global oil price benchmark, rose $1.14 (1.34%) to $86.39 per barrel.