[New York Stock Market] Unified Decline Amid Tariff Uncertainty... 'Dovish Powell' Effect Lasts Only One Day

Repeated Fluctuations End in Slight Decline
Powell Says "Tariff-Driven Inflation Is Temporary"
Caution Remains Amid Tariff Uncertainty
Existing Home Sales Surpass Expectations at 4.26 Million
Triple Witching Day on the 21st... $4.5 Trillion in Options Expire

The three major indices of the U.S. New York Stock Exchange all closed slightly lower on the 20th (local time). This marked a shift to weakness just one day after rising following the Federal Open Market Committee (FOMC) decision the previous day, which maintained expectations for two interest rate cuts this year. Concerns over tariff policies and uncertainties surrounding the U.S. economy persisted in the market, causing the stock market to fail to rise for two consecutive days.

Reuters Yonhap News

On this day in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks closed at 41,953.32, down 11.31 points (0.03%) from the previous trading day. The S&P 500, centered on large-cap stocks, fell 12.4 points (0.22%) to 5,662.89, and the Nasdaq, focused on technology stocks, dropped 59.16 points (0.33%) to 17,691.63.

The market fluctuated throughout the day. The three major indices started lower at the opening but turned upward after existing home sales unexpectedly increased. According to the National Association of Realtors (NAR), existing home sales in February rose 4.2% month-over-month to 4.26 million units, significantly exceeding market expectations of 3.95 million units. Last week (March 9?15), new U.S. unemployment claims also came in at 223,000, below the forecast of 224,000, indicating a robust recovery in the labor market.

However, in the afternoon, investors focused on policy uncertainties such as tariffs, causing the market to fluctuate repeatedly and ultimately close slightly lower. Volatility also appeared to increase ahead of the "Triple Witching Day" on the 21st, when options worth $4.5 trillion expire simultaneously. Triple Witching Day refers to the day when individual stock options, stock index futures, and stock index options expire simultaneously.

Daniel Skelly, Head of Market Research and Strategy at Morgan Stanley Wealth Management, said, "It is highly likely that the recent correction has bottomed out, but the end of volatility may not be in sight." He added, "Policy uncertainty has not disappeared, and the market remains sensitive to changes in sentiment."

The biggest event this week was the FOMC regular meeting held the previous day. The U.S. Federal Reserve (Fed) kept the benchmark interest rate unchanged at 4.25?4.5% and maintained the forecast for two rate cuts this year. The economic outlook for this year was significantly revised, lowering growth forecasts and raising inflation expectations. In the new Summary of Economic Projections (SEP), the Fed adjusted this year's Gross Domestic Product (GDP) growth rate from 2.1% to 1.7%, and the core Personal Consumption Expenditures (PCE) price index inflation rate from 2.5% to 2.8%. This is interpreted as partially revealing concerns about stagflation (economic slowdown amid rising prices).

However, Fed Chair Jerome Powell sent a dovish (monetary easing-preferred) message to the market. Powell viewed the price increases caused by President Donald Trump's tariff policies as "transitory" and considered the possibility of a recession to be low. He said, "Our policy is well-positioned to respond to upcoming developments," focusing on reassuring the market.

Nevertheless, as the April 2nd schedule for imposing reciprocal tariffs, repeatedly announced by President Trump to the world, approaches, market volatility is likely to increase further.

Sam Stovall, Chief Investment Strategist at CFRA Research, said, "Bull markets die of fear, and what they fear most is a recession." He added, "We are not heading into a recession, but we still do not know exactly what will happen due to tariffs."

By individual stocks, Nvidia rose 0.86%. Jensen Huang, Nvidia's CEO, said in an interview with the Financial Times (FT), "We will procure about $500 billion worth of semiconductors and electronic equipment over the next four years, and several hundred billion dollars worth of products will be produced within the United States." Apple fell 0.53%, and Alphabet, Google's parent company, dropped 0.74%. U.S. electric vehicle maker Tesla rose 0.17%.

U.S. Treasury yields were slightly lower. The 10-year U.S. Treasury yield, a global bond yield benchmark, fell 1 basis point (1 bp = 0.01 percentage point) from the previous trading day to 4.24%, and the 2-year U.S. Treasury yield, sensitive to monetary policy, also declined 1 bp to 3.96%.