New York Stock Market Rises Early Despite 'FOMC Shock'... Rebound Buying Influx

Inflow of Low-Price Buying Indicates Oversold Condition
NVIDIA Rises 3.37%... Financial Stocks Also Up
Q3 GDP Growth Rate Exceeds Preliminary Estimate at 3.1%
November PCE Inflation Data to Be Released Next Day

The three major indices of the U.S. New York stock market all rose in early trading on the 19th (local time). After the market plunged the previous day due to the Federal Reserve (Fed) announcing a slowdown in the pace of interest rate cuts, a rebound buying trend emerged on this day. The U.S. economy's resilience was once again demonstrated as the third-quarter U.S. Gross Domestic Product (GDP) achieved a growth rate exceeding 3%, driven by increased consumption.

As of 11:29 a.m. in the New York stock market on this day, the Dow Jones Industrial Average (Dow), centered on blue-chip stocks, was trading at 42,602.34, up 0.65% from the previous trading day. The S&P 500, focused on large-cap stocks, rose 0.73% to 5,914.75, and the Nasdaq, centered on technology stocks, jumped 0.91% to 19,568.24.

The previous day, the New York stock market fell across the board due to the Fed's "hawkish rate cut." The Dow fell 2.58% from the previous trading day, while the S&P 500 and Nasdaq dropped 2.95% and 3.56%, respectively. Although the Fed decided to lower the benchmark interest rate by 0.25 percentage points to 4.25?4.5%, investor sentiment worsened as the expected number of rate cuts next year was reduced from four cuts of 0.25 percentage points each (total 1.0 percentage point) to two cuts (total 0.5 percentage points). Fed Chair Jerome Powell explained that the rebound in inflation is the reason for slowing the pace of rate cuts.

Investors judged that the previous day's market plunge was excessive and engaged in bargain hunting in early trading on this day. By stock, Nvidia, the leader in artificial intelligence (AI), surged 3.37%. Apple rose 1.22%, and Microsoft (MS) increased 1.03%. Financial stocks also showed gains. JP Morgan jumped 1.92%, while Morgan Stanley and Bank of America (BoA) rose 1.01% and 0.76%, respectively.

Major indicators released this morning reaffirmed the robustness of the U.S. economy. The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) announced that the final figure for third-quarter real GDP grew at an annualized rate of 3.1% quarter-over-quarter. This exceeded the previously released flash and preliminary estimates (both 2.8%) as well as the second-quarter growth rate (3.0%). Personal consumption expenditures increased 3.7% quarter-over-quarter, significantly contributing to third-quarter growth. As the U.S. economy maintains strong growth, the Fed's stance suggesting a slowdown in the pace of rate cuts next year gained more weight.

Oren Klakin, an economist at Nationwide, said, "The indicators released this week show that the economy will finish 2024 in a robust state," but added, "I still think the Fed is leaning toward monetary easing, but the bar for rate cuts has been raised."

The labor market also remained robust. According to the U.S. Department of Labor on this day, initial jobless claims for the week of December 8?14 fell by 22,000 from the revised previous week to 220,000. This was also 9,000 below the expert forecast of 229,000.

Now, investors' attention is turning to the November Personal Consumption Expenditures (PCE) price index to be released the next day. The importance of inflation data was highlighted again after Chair Powell stated the previous day that "progress on inflation will be considered when reviewing additional rate cuts." The Department of Commerce announced that the core PCE price index, which the Fed prioritizes most, rose 2.2% quarter-over-quarter in the third quarter, exceeding the preliminary estimate by 0.1 percentage points. According to market experts' forecasts, the November core PCE price index likely rose 2.9% year-over-year, an increase from October's 2.8%.

U.S. Treasury yields are mixed by maturity. The 10-year U.S. Treasury yield, a global bond yield benchmark, surpassed 4.5% for the first time in six months the previous day and is currently at 4.55%, up 5 basis points (1 bp = 0.01 percentage points) from the previous day. The 2-year U.S. Treasury yield, sensitive to monetary policy, fell 6 basis points to 4.29% compared to the previous day.