New York Stock Market Rises Early... Fed Officials' Remarks Draw Attention Amid Soft Landing Expectations

This Week's PCE Inflation and Manufacturing PMI Releases
Fed Officials' Public Remarks Expected... Clues on Future Rate Cuts

The three major indices of the U.S. New York stock market showed a firm upward trend in the early trading session on the 23rd (local time). After a temporary decline following the Federal Reserve's (Fed) 'big cut' (0.5 percentage point interest rate cut) last week, the market rebounded amid expectations of a soft landing. This week, investors are expected to gauge the pace and extent of future rate cuts by awaiting various economic indicators and statements from Federal Open Market Committee (FOMC) members.

As of 9:47 a.m. in the New York stock market on this day, the Dow Jones Industrial Average, centered on blue-chip stocks, was trading at 42,081.92, up 0.04% from the previous trading day. The S&P 500 index, focused on large-cap stocks, rose 0.12% to 5,709.54, and the Nasdaq index, centered on technology stocks, increased 0.14% to 17,972.76.

This week, major economic indicators such as the August Personal Consumption Expenditures (PCE) price index, the finalized Q2 real Gross Domestic Product (GDP) growth rate, September Manufacturing and Services Purchasing Managers' Index (PMI), and weekly unemployment claims will be released.

On this day, S&P Global released the September manufacturing PMI, which gauges the U.S. manufacturing and service sectors. The manufacturing PMI for this month recorded 47, down from 47.9 in the previous month and below the market forecast of 48.6. A figure below 50 indicates contraction, while above 50 indicates expansion. This month, the manufacturing sector continued its contraction phase more strongly than expected.

Federal Reserve Chair Jerome Powell and other Fed officials are scheduled to make numerous public remarks this week. On this day, Raphael Bostic, President of the Federal Reserve Bank of Atlanta; Austan Goolsbee, President of the Federal Reserve Bank of Chicago; and Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, spoke. Since the Fed lowered the benchmark interest rate by 0.5 percentage points from 5.25-5.50% to 4.75-5.00% on the 18th, Wall Street is paying closer attention than ever to the Fed officials' remarks this week. Investors are expected to interpret these statements to understand the rationale behind the rate cuts, the Fed's economic outlook, and the direction of future rate reductions. In particular, explanations regarding the big cut are crucial as they reveal the Fed's perception of the economic situation to investors.

Ronald Temple, Chief Market Strategist at Lazard, analyzed, "Rate cuts signal that the Fed is willing to act swiftly with insurance policies if the labor market weakens excessively. While a 25 basis point (bp) or 50 bp cut may not materially change the economic trajectory in the short term, the signal itself is important."

By individual stocks, Intel is up 2.06%. A Bloomberg report yesterday that Apollo Global Management proposed a $5 billion equity investment in Intel, which is facing financial difficulties, boosted the stock price. This came shortly after news last week that Qualcomm had approached Intel for a potential acquisition. Pinterest, a social networking service, rose 1.15% as Deutsche Bank issued a 'buy' rating. Networking software company Sienna surged 4.56% after Citigroup upgraded its rating by two notches from 'sell' to 'buy.'

Government bond yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 2 basis points from the previous trading day to 3.75%, while the 2-year Treasury yield, sensitive to monetary policy, increased 2 basis points to 3.59%.

International oil prices are moving sideways amid supply concerns caused by Hurricane Francine making landfall in the U.S. and expectations of weakening demand in China. West Texas Intermediate (WTI) crude oil rose $0.04 (0.1%) to $71.04 per barrel, while Brent crude, the global oil price benchmark, fell $0.06 (0.1%) to $74.43 per barrel.