[New York Stock Market] Mixed Close Amid Uncertain FOMC Despite Strong Consumer Spending

The New York stock market closed mixed ahead of the Federal Open Market Committee (FOMC) meeting results.

On the 17th (local time) in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 41,606.18, down 0.04% from the previous session. The S&P 500 index rose 0.03% to 5,634.58, and the Nasdaq index closed up 0.20% at 17,628.06. The S&P 500 hit an all-time high of 5,670.81 during the session, and the Dow also set a new record at 41,835.28.

August U.S. retail sales exceeded expectations, raising hopes that a U.S. economic recession is not imminent, which pushed stock prices higher. According to the U.S. Department of Commerce, August U.S. retail sales, seasonally adjusted, increased by 0.1% from the previous month to $710.8 billion, surpassing the market expectation of a 0.2% decline. U.S. consumer spending is a key pillar accounting for two-thirds of the U.S. economy. With consumption flows remaining strong, concerns about the U.S. economy eased.

However, due to the ongoing two-day FOMC meeting starting that day and the continued uncertainty about its outcome, major stock indices gave up most of their intraday gains.

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market priced in a 65% probability of a 0.5 percentage point rate cut at the close of this FOMC meeting. Meanwhile, the probability of a 0.25 percentage point cut remained around 35%. It is quite rare for market expectations to be this divided ahead of an FOMC meeting, which strengthened stock selling sentiment.

The stock price of semiconductor company Intel rose more than 2%. This was due to the effect of announcing a major restructuring plan, including spinning off its foundry business, which it has been heavily investing in since 2021, and halting the construction of overseas factories. Microsoft’s stock rose nearly 1% after unveiling a $60 billion share buyback plan and a 10% dividend increase. Among the 'Magnificent 7' big tech companies, only Nvidia (-1.02%) declined, while the others rose around 1%.

Although the retail sales indicator improved, major offline retailers such as Walmart and Costco Wholesale saw their stock prices fall by 2.43% and 1.17%, respectively. This is interpreted as the significant increase in online sales in retail sales weighing on the stock prices of large supermarket chains.

U.S. industrial production in August exceeded market expectations and turned to an upward trend. August industrial production increased by 0.8% month-over-month on a seasonally adjusted basis, while the market expected a 0.2% increase.

Homebuilder sentiment for this month met expectations. According to the National Association of Home Builders (NAHB), the preliminary September housing market sentiment index was 41, matching market expectations. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose 0.47 points (2.74%) to 17.61 compared to the previous session.