[New York Stock Market] Tariff-Induced Correction Overcome, Second Day of Gains... Dow Up 0.85% on Low-Price Buying Inflow

Bargain Buying Drives Two Consecutive Days of Gains
February Retail Sales Up 0.2% Month-on-Month, Below Expectations
Tariff Uncertainty Remains a Source of Market Instability
Focus on FOMC Decision on the 19th... Key Issue Is This Year's Rate Outlook

The three major indices of the U.S. New York Stock Exchange all closed higher on the 17th (local time), which was St. Patrick's Day. After last week's sharp decline due to concerns over a tariff-induced recession, bargain buying entered the market, leading to two consecutive days of gains. Investors are awaiting the Federal Open Market Committee (FOMC) regular meeting of the U.S. Federal Reserve (Fed), which will be held over two days starting on the 18th.

Reuters Yonhap News

On that day in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks closed at 41,841.63, up 353.45 points (0.85%) from the previous trading day. The S&P 500, centered on large-cap stocks, rose 36.19 points (0.65%) to 5,675.12, and the Nasdaq, focused on technology stocks, increased by 54.58 points (0.31%) to close at 17,808.67.

The stock market experienced a significant decline last week due to concerns over a recession caused by President Donald Trump's tariff policies. Although the market rose on the last trading day of last week, the Dow recorded the largest weekly drop since 2023. The Nasdaq was in a technical correction phase, having fallen 12% from its previous all-time high as of the closing price on the 14th. On this day, bargain buying entered the market, helping the stock market recover from last week's correction and rise.

David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, analyzed, "Corrections during a bull market tend to be good buying opportunities," adding, "Although policy uncertainty has hit the market hard, I believe much of it has now been resolved."

The retail sales data released that morning for the previous month fell short of market expectations but was not considered bad enough to cause concern. According to the U.S. Department of Commerce, retail sales in February this year totaled $722.7 billion, up 0.2% from the previous month. The market had initially expected retail sales to increase by 0.6% last month, so the actual figure was significantly below expectations. January's retail sales were also revised from an initial 0.9% decrease to a 1.2% decrease, marking the largest decline in three years and seven months since July 2021. However, retail sales excluding automobiles rose 0.3% month-over-month, meeting expectations and providing relief to the market. Core retail sales (control group), which exclude volatile sectors, also increased by 1%, significantly exceeding the forecast of 0.2%, easing some concerns. Core retail sales exclude food services, automobiles, building materials, and gas station sales and are reflected in the calculation of Gross Domestic Product (GDP), making them a focus for experts.

Jennifer Timmerman, investment strategy analyst at Wells Fargo Investment Institute, assessed, "The February retail sales report released this morning (the 17th) provides evidence of a limited and moderate economic slowdown rather than a signal that a recession is imminent."

However, tariff uncertainty remains a source of market instability. U.S. Treasury Secretary Janet Yellen appeared on NBC's "Meet the Press" the previous day and commented on the recent market decline due to tariff concerns, saying, "Having worked in investment for 35 years, I can say this correction is healthy and normal," adding, "An unhealthy market is one that is overly euphoric, and that leads to financial crises." She stated that a "detox" is necessary to shift from government spending-driven growth to private spending-driven growth and noted that there is "no guarantee" that a recession can be avoided.

Derek Harris, portfolio strategist at Bank of America (BoA) Securities, forecasted, "The 'detox' of U.S. efficiency, deregulation, and trade could cause more pain in the market before visible GDP growth appears."

The big event this week is the FOMC's interest rate decision on the 19th. While it is widely expected that the Fed will keep rates steady at 4.25-4.5% per annum, attention is focused on the dot plot outlining this year's rate outlook. Previously, in December last year, the Fed significantly reduced the expected number of rate cuts in 2025 from four times (total 1.0 percentage point) to two times (total 0.5 percentage point), each by 0.25 percentage points. The key question is whether the Fed will adopt a hawkish stance in the dot plot it will release this time, reducing the expected rate cuts this year to one due to inflation concerns, or take a dovish approach, increasing the expected cuts to three due to recession fears. However, Wall Street largely expects the Fed to maintain the forecast of two rate cuts this year.

On the 20th, weekly initial jobless claims, which indicate the labor market status, will be announced.

U.S. Treasury yields are mixed but stable. The 10-year U.S. Treasury yield, a global bond yield benchmark, fell by 1 basis point (1 bp = 0.01 percentage point) to 4.29%, while the 2-year Treasury yield, sensitive to monetary policy, rose by 3 basis points to 4.04% compared to the previous trading day.

By individual stocks, Walmart rose 2.47%. Costco increased by 1.4%. Financial stocks also showed strength, with JP Morgan up 0.64% and Bank of America (BoA) rising 1.35%.