[New York Stock Market] Broad Rise on Falling International Oil Prices... Nasdaq Up 1.45%

Oil Prices Drop Over 4% on Israel-Hezbollah Ceasefire Possibility
Bond Yields Slightly Decline...Tech Stocks Rise
Focus on June 9 FOMC Minutes and June 10 CPI

The three major indices of the U.S. New York Stock Exchange all closed higher on the 8th (local time). Investor sentiment, which had been suppressed due to falling international oil prices, revived. The bond yields, which had surged the previous day, also slightly declined, supporting the rise in the indices.

On that day in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 42,080.37, up 126.13 points (0.3%) from the previous trading day. The S&P 500 index, focused on large-cap stocks, rose 55.19 points (0.97%) to 5,751.13, and the Nasdaq index, centered on technology stocks, gained 259.01 points (1.45%) to close at 18,182.92.

The market sentiment revived as oil prices, which had surged due to Middle East war concerns, fell for the first time in a while. West Texas Intermediate (WTI) crude oil closed at $73.57 per barrel, down $3.57 (4.63%) from the previous trading day, and Brent crude, the global oil price benchmark, fell $3.75 (4.63%) to $77.18 per barrel. The decline in oil prices was triggered by Lebanon’s armed faction Hezbollah expressing willingness to negotiate a ceasefire with Israel.

Bond yields, which had surged the previous day, also slightly declined, acting as a positive factor. The yield on the U.S. 10-year Treasury note, a global bond yield benchmark, fell by 1 basis point (1 bp = 0.01 percentage point) to 4.01% compared to the previous trading day, while the yield on the U.S. 2-year Treasury note, sensitive to monetary policy, traded down 4 basis points to around 3.96%. After a surprise increase in September employment eliminated expectations of a 'big cut' (0.5 percentage point rate cut), the 10-year Treasury yield had surpassed 4% for the first time in two months the previous day.

The market is also anticipating the possibility of a rate hold at the next Federal Open Market Committee (FOMC) meeting in November. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market currently prices in a 13.3% chance that the Fed will hold rates steady next month, up from 0% a week ago. The probability of a 0.25 percentage point rate cut increased from 63.2% to 86.7% during the same period. The chance of a 0.5 percentage point cut dropped from 36.8% to 0%.

In public remarks on the day, Susan Collins, President of the Federal Reserve Bank of Boston, stated that rate cuts should be cautious and data-driven. Raphael Bostic, President of the Federal Reserve Bank of Atlanta, assessed that although threats to the labor market have increased, the economy remains strong.

Mark Heffele, Chief Investment Officer (CIO) of UBS Global Wealth Management, said, "U.S. economic indicators are not strong enough for the Fed to end the rate cut cycle," adding, "Investors are confident that additional rate cuts will be positioned for."

Investors’ attention is focused on the upcoming release of the FOMC minutes and inflation data this week. The FOMC minutes, to be released on the 9th, are expected to provide more detailed insights into the background of the Fed’s big cut and offer hints about future economic outlooks and monetary policy paths. On the 10th, the Consumer Price Index (CPI) will be released, followed by the Producer Price Index (PPI) on the 11th.

Companies have entered earnings season. Delta Air Lines will report earnings on the 10th, and JPMorgan Chase on the 11th.

By sector, technology stocks rose significantly. Nvidia, the leader in artificial intelligence (AI), jumped 4.05%. Semiconductor company Broadcom rose 3.23%. Tesla increased by 1.52%, while Meta, Facebook’s parent company, and Microsoft (MS) gained 1.39% and 1.26%, respectively.