New York Stock Market Rises Together... Dow Closes Up 1.64%

S&P 500 and Nasdaq Rise After Four Days

The New York stock market showed a simultaneous rise. Amid the slowdown in the June U.S. inflation indicators, expectations of interest rate cuts and bargain hunting sentiment supported the stock market.

At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 40,589.34, up 654.27 points (1.64%) from the previous session.

The Standard & Poor's (S&P) 500 index rose 59.88 points (1.11%) to 5,459.10, and the Nasdaq Composite Index closed at 17,357.88, up 176.16 points (1.03%) from the previous session.

The S&P 500 and Nasdaq indices showed an upward trend for the first time in four days. After experiencing downward pressure due to a large volume of profit-taking sales over the past three trading days, the stock indices rose again thanks to bargain buying.

However, on a weekly basis, the Nasdaq index has undergone a sharp correction for two consecutive weeks. Following a 3.65% drop last week, it fell another 3.08% this week. The S&P 500 index declined 1.97% last week and 1.92% this week.

Photo by Jo Yongjun jun21@

While bargain buying pushed the stock prices up that day, the June U.S. Personal Consumption Expenditures (PCE) price index, which met expectations and continued its slowdown, also contributed to the market strength. The PCE price index is an inflation indicator closely monitored by the Federal Reserve (Fed).

According to the U.S. Department of Commerce, the core PCE price index for June rose 0.2% month-over-month. Although this increase was slightly steeper than the 0.1% rise in the previous month, it was in line with market expectations. The year-over-year figure was slightly higher than expected.

The June PCE price index, which includes both energy and food prices, also rose 0.1% month-over-month, meeting expectations. On a year-over-year basis, it increased 2.5%, matching forecasts.

Notably, inflation in the services sector rose by only 0.2% month-over-month, marking the smallest increase in eight months. Service inflation has been identified as a major factor driving this year's high inflation rates.

The 'supercore' sector (core services excluding housing), which the Fed pays particular attention to, showed a slight increase for the first time in three months. However, overall expectations for a September rate cut remained strong.

According to the University of Michigan, the final consumer sentiment index for July was 66.4. This was an improvement from the preliminary July figure of 66.0 but a decline compared to the June final figure of 68.2.

The consumer expectations index, which reflects future economic outlook, was 68.8, and the current economic conditions index was 62.7. Both worsened compared to the previous month.

Most major tech stocks also rebounded. Microsoft rose 1.64%, Amazon 1.47%, and Meta Platforms 2.71%. AI and semiconductor-related stocks such as Nvidia, Broadcom, ASML, Qualcomm, and Intel also rebounded by about 1-2%.

On the other hand, Alphabet, Google's parent company, experienced a decline again after news that OpenAI's generative AI service ChatGPT would launch 'SearchGPT' with search functionality. Concerns arose that Google's dominance in the search market could be undermined.

Shares of 3M, a blue-chip company that reported strong second-quarter earnings, surged 23% from the previous day. According to CNBC, this was the highest daily gain since at least 1972.

By sector, all sectors showed strength. Consumer discretionary, financials, industrials, materials, real estate, and technology sectors all posted gains of over 1%.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market priced in a 100% probability of a rate cut in September by the close of trading. The probability of three 25 basis point rate cuts by the end of December also rose to 56%, increasing expectations.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) closed at 16.39, down 2.07 points (11.21%) from the previous session.