[New York Stock Market] Three Major Indexes Reach All-Time Highs... Tech Stock Rally and Powell's Optimism on US Economy

Tech Stocks Rally Amid Santa Rally Expectations
Salesforce and Marvell Surge on Strong Earnings
Powell: "Economy Stronger Than Expected"
Focus on Nov. 6 Labor Dept. Employment Report

The three major indices of the U.S. New York Stock Exchange all hit record highs on the 4th (local time). The Dow Jones Industrial Average (Dow) surpassed the 45,000 mark for the first time. Technology stocks surged amid expectations of a 'Santa Rally,' and the index rose as Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), expressed confidence in the U.S. economy.

On that day in the New York stock market, the blue-chip-focused Dow closed at 45,014.04, up 308.51 points (0.69%) from the previous trading day, surpassing the 45,000 mark for the first time. The large-cap-focused S&P 500 rose 36.61 points (0.61%) to 6,086.49, and the tech-heavy Nasdaq rose 254.21 points (1.3%) to 19,635.12, setting new all-time highs once again.

By individual stocks, enterprise software (SW) company Salesforce soared 10.99% after announcing fiscal third-quarter results that exceeded market expectations. Semiconductor company Marvell Technology also surged 23.19% following better-than-expected earnings and an optimistic outlook for the fourth quarter. AI leader Nvidia jumped 3.48%.

Nancy Tangler, CEO of rapper Tangler Investments, said, "People told me that my time trading tech stocks was over," adding, "Looking at sector earnings, although they lagged since last July, it does not mean that (earnings) cannot accelerate again." She further stated, "The market expanding (due to strength in other sectors) is not a zero-sum game, nor does it mean tech stocks cannot perform better."

Powell's optimistic assessment that the U.S. economy is stronger than expected also stimulated investor sentiment. At the New York Times (NYT) DealBook Summit held in New York that day, he said, "The economy is stronger than we anticipated last September," and added, "The Fed has room to be more cautious until we find a neutral interest rate level that neither stimulates nor slows economic growth." This was interpreted as suggesting that the pace of rate cuts could slow due to solid economic growth. This aligns with the minutes of the November Federal Open Market Committee (FOMC) meeting, which included a gradual rate cut policy.

On the other hand, the private employment data released that day showed a slowdown. According to the employment report released by private labor market research firm ADP, private sector new job creation in November increased by 146,000, below the market expectation of 166,000 and the October figure of 184,000. However, the ADP private employment report is generally considered by the market to not provide an accurate picture of the labor market. The most reliable employment trend will be confirmed in the November employment report to be released by the U.S. Department of Labor on the 6th. Experts expect nonfarm payrolls to have increased by 200,000 last month. The unemployment rate is expected to have remained steady at 4.1% compared to the previous month.

The market is highly likely to expect the Fed to cut the benchmark interest rate by 0.25 percentage points this month and hold steady in January. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on that day reflected a 77.5% chance that the Fed would cut rates by 0.25 percentage points at the December FOMC regular meeting and a 22.5% chance of holding rates steady. The probability of a small cut (0.25 percentage points) in December followed by a hold in January is 64.5%.

Government bond yields are on a downward trend. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 3 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.18%, while the U.S. 2-year Treasury yield, sensitive to monetary policy, dropped 4 basis points to 4.13%.

Meanwhile, Korean stocks related to Korea, which had fallen in the New York stock market due to the declaration and lifting of martial law by President Yoon Seok-yeol the previous day, showed mixed price movements on this day. Webtoon Entertainment rose 5.44%, and POSCO Holdings increased 0.69%. On the other hand, Coupang fell 0.21%, and KT and KB Financial declined 2.66% and 0.56%, respectively. The won-dollar exchange rate recorded 1,413.44 won, down 0.07% from the previous day.