(New York = Yonhap News) Yoon Young-sook, Yonhap Infomax Correspondent = The New York stock market fell as government bond yields surged again as they digested the results of the Federal Open Market Committee (FOMC) held the day before.
As of 10:21 am at the New York Stock Exchange (NYSE) on the 5th (US Eastern time), the Dow Jones Industrial Average recorded 33,477.51, down 583.55 points (1.71%) from the previous field.
The Standard & Poor’s (S&P) 500 index fell 95.67 points (2.22%) to 4,204.50, and the Nasdaq index, centered on technology stocks, fell 429.42 points (3.31%) to 12,535.44, down from the battlefield.
The market, which had a relief rally over the results of the FOMC meeting of the Federal Reserve (Fed), returned the gains in one day.
While Fed Chairman Jerome Powell cut off the possibility of a 75bp rate hike, alleviating concerns about aggressive tightening, the market remains under pressure as the Fed hints at an additional 50bps rate hike at its next two meetings.
The 10-year government bond yield also turned upward again, trading at around 3.03%, up 10bp (0.1% point) at this time. The steep rise in government bond yields puts a strain on the stock price in that it hurts the future earnings of tech stocks and growth stocks.
David Rubenstein, co-founder of the Carlyle Group, told CNBC that investors need to come back to reality, realizing the headwinds the rate hike will bring to markets and the economy.
He predicted that if interest rates are raised by 50 basis points more at the next two meetings, the financial environment will become a little tighter.
The Bank of England raised the benchmark interest rate by 0.25 percentage points from 0.75% to 1.0%. This is four consecutive hikes.
The pound depreciated sharply as the Bank of England decided to raise interest rates.
After the central bank expects inflation to soar to 10.25% this year and the growth rate to fall to 1% in the fourth quarter, the central bank expects negative growth next year to negative 0.25%. This is because the outlook has been strengthened.
US economic indicators were mixed.
According to Challenger, Gray and Christmas (CG&C), the number of layoffs planned for April was 24,286, up 14% from 21,387 in the previous month. Although the number of layoffs increased for the second month in a row, the total number of layoffs this year was 79,982, down 52% from the same period last year, the lowest since data collection in 1993.
The number of claims for unemployment insurance for the week ending April 30 was 200,000, down 19,000 from the previous week on a seasonally adjusted basis. This was higher than the estimate of 182,000 by experts compiled by the Wall Street Journal (WSJ), but maintaining the level of around 200,000.
In the first quarter of this year, U.S. nonfarm payroll productivity fell 7.5% on a seasonally adjusted annual basis compared to the previous quarter. This was the biggest decline since the third quarter of 1947 and was weaker than the 5.2% decline expected by the market. Productivity fell sharply, and unit labor cost soared 11.6% on an annualized basis compared to the previous quarter. The unit labor cost showed the steepest rise in about 40 years since the third quarter of 1982.
New York stock market analysts expected the stock’s uptrend to be difficult to sustain as the Fed continues to tighten.
“The financial environment has been tightening in the past few months, but it is clear that the Fed will tighten further,” Zachary Hill, head of portfolio strategy at Horizon Investments, told CNBC.
“Higher stock valuations are incompatible with that wish,” he said. said
European stocks rose all at once.
Germany’s DAX index rose 0.38%, while the UK stock market rose 1.04%. The pan-European STOXX600 index was up 0.18%.
International oil prices rose on the news that oil-producing countries agreed to maintain their existing scale of production increases in June at the meeting of the oil-producing countries.
The Organization of Petroleum Exporting Countries (OPEC) and OPEC+ (OPEC Plus), a consultative body of major oil producing countries such as Russia, agreed to increase production by 432,000 barrels per day in June.
The price of West Texas Intermediate (WTI) for June contract rose 1.22% to $109.13 per barrel, and the price of Brent for July contract rose 1.62% to $111.92 per barrel.
Fed Chairman Jerome Powell’s speech is projected on a screen in the hall of the New York Stock Exchange.
ysyoon@yna.co.kr
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