[New York Stock Exchange] Mixed Close Amid FOMC Caution... Dow Down 0.38%

The three major indices on the New York Stock Exchange closed mixed on December 9 (local time). As investors awaited the U.S. Federal Reserve's decision on the benchmark interest rate, which is just one day away, the market showed no clear direction amid a wait-and-see attitude. However, there were also concerns that risk appetite could weaken if the Fed signals a cautious approach to adjusting the pace of monetary easing.

Reuters Yonhap News

On this day, the Dow Jones Industrial Average, which is focused on blue-chip stocks, closed at 47,560.29, down 179.03 points (0.38%) from the previous session. The S&P 500 Index, representing large-cap stocks, ended at 6,840.51, down 6 points (0.09%), while the tech-heavy Nasdaq Index closed at 23,576.486, up 30.582 points (0.13%).

Starting today, the Fed is holding its final Federal Open Market Committee (FOMC) meeting of the year over two days to determine the benchmark interest rate, which currently stands at 3.75-4.0% per year. The market is widely expecting a third consecutive 0.25 percentage point rate cut, following similar moves in September and October. According to CME FedWatch, as of today, the interest rate futures market is pricing in an 87.4% probability of a 0.25 percentage point cut at this meeting, while the probability of a rate hold stands at 12.6%.

The main focus for the market is not on whether the rate will be cut, but rather on the Fed's message regarding the future path of monetary policy. With U.S. employment slowing and inflation still above the Fed's 2% target, there are diverging views within the FOMC on whether to cut rates further or to pause. Even if a rate cut is implemented, key points of interest include whether the committee members are in agreement and the degree of hawkishness reflected in the dot plot, which contains projections for next year's rates. Market attention is also expected to be high for the press conference by Fed Chair Jerome Powell, which will be held immediately after the rate decision.

Brett Kenwell, U.S. investment analyst at eToro, said, "At this point, a rate cut is almost certain, but the Fed's economic outlook and comments from Chair Jerome Powell will have a major impact on market reactions." He added, "After recent declines in the stock and crypto markets, risk-seeking investors are hoping that the Fed will fuel a year-end rally rather than dampen the recent rebound."

Tom Essaye, founder of The Sevens Report, observed, "It is no exaggeration to say that a rate cut is actually the least important aspect of this meeting," adding, "The market is much more interested in whether the Fed will signal a continuation of rate cuts or indicate a pause in the rate-cutting cycle."

Employment data released today also supported the outlook for a Fed rate cut. According to the Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor, the number of job openings was 7,658,000 in September and 7,670,000 in October. Both figures increased from the previous month. While job openings rose, layoffs also increased. Voluntary resignations totaled 2,941,000 (quit rate of 1.8%), down from 3,128,000 (2.0%) the previous month, while involuntary separations (layoffs) rose to 1,854,000 (layoff rate of 1.2%), up from 1,781,000 (1.1%) the previous month, marking the highest level since early 2023. In other words, fewer workers are quitting voluntarily, while layoffs are increasing. This suggests that although job openings are up, companies are becoming more cautious about new hires due to factors such as tariff policies, rising costs, and economic uncertainty, and workers themselves are viewing the labor market more pessimistically.

Stuart Paul, economist at Bloomberg Economics, commented, "A closer look at the October JOLTs report shows that labor demand is relatively weaker than the headline numbers suggest," adding, "The Fed is unlikely to view the labor market as the current source of inflationary pressure."

On Wall Street, there are predictions that the FOMC outcome could increase volatility in both the stock and Treasury markets.

Vincent Juvyns, chief investment strategist at ING, said, "Given the current tension in the global bond market, this Fed meeting has the potential to add fuel to the fire," adding, "Investors will also be watching Oracle and Broadcom's earnings very closely. A lot is at stake this week."

Oracle is scheduled to release its earnings on December 11, while Broadcom will announce its results on December 12.

U.S. Treasury yields were slightly firmer. The yield on the benchmark 10-year Treasury note, a global bond market benchmark, fell by 1 basis point (1bp = 0.01 percentage point) from the previous session to 4.18%, while the yield on the 2-year Treasury note, which is sensitive to monetary policy, rose by 2 basis points to 3.6%.