U.S. Treasury yields calm down, narrowing the decline… Dow rebounds
Unemployment claims continue to be the highest in three years
The three major indices of the New York stock market closed with mixed results on the 26th (local time), the day after the Christmas holiday. The stock market, which fell early in the day due to the rise in U.S. Treasury yields, reduced its losses as Treasury yields calmed down in the afternoon, and the Dow Jones Industrial Average (Dow Index) succeeded in rebounding. Although the stock market did not show a clear direction amid quiet trading, expectations for a ‘Santa Rally’ are not extinguished.
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On this day in the New York stock market, the blue-chip Dow index closed at 43,325.8, up 28.77 points (0.07%) from the previous trading day. The S&P 500 index, centered on large-cap stocks, closed at 6,037.59, down 2.45 points (0.04%), and the Nasdaq index, centered on technology stocks, closed at 220.36, down 10.77 points (0.05%).
By stock, Alibaba rose 0.58%. The news that Alibaba International and Shinsegae Group established a joint venture in Korea and incorporated G Market and AliExpress Korea as subsidiaries to strengthen their presence in the e-commerce market acted as positive news. Apple rose 0.32%. Wedbush Securities expects that Apple’s artificial intelligence (AI) service, ‘Apple Intelligence’, will generate a large demand for replacement iPhones, and raised its target stock price from $300 to $325. Nvidia fell 0.21%, and Tesla fell 1.76%.
While trading volume decreased significantly due to the year-end holiday season, the New York stock market was greatly affected by the movement of government bond interest rates on this day. When the 10-year U.S. Treasury yield, a global bond interest rate benchmark, exceeded 4.6% this morning, investor sentiment weakened and the index fell in early trading. However, interest rates turned downward in the afternoon, reducing the stock market’s decline. The current U.S. Treasury interest rate is 4.58% for 10-year bonds and 4.33% for 2-year bonds, which are sensitive to monetary policy, down from the morning.
Investors’ attention is focused on whether the Santa Rally will unfold. The Santa Rally refers to a phenomenon in which the stock market rises during the last five trading days of the year and the first two trading days of the year. The New York stock market rose simultaneously on the 24th, raising expectations for a Santa rally. In particular, the S&P 500 index rose 1.1%, the largest increase since 1974 on the 24th, Christmas Eve, Bespoke Investment Group analyzed. This week, the S&P 500 index rose 1.8%, and the Dow and NASDAQ rose 1% and 2.3%, respectively.
On Wall Street, there are mixed views of optimism and caution regarding the outlook for the Santa Rally. The Santa Rally has a significant impact on investment sentiment in January of the following year, and the market is paying close attention to the direction of the stock market at the end of the year.
“The Santa Rally may be alive and well, but it could be a tough sleigh ride,” said Michael Jin, senior portfolio manager at UBS Wealth Management. “It is not an indicator for February,” he said.
Jonathan Krinsky, chief market technical analyst at BTIG, said, “The market may continue its upward trend until the end of the year, and the S&P 500 may break the all-time high by exceeding 6,100,” but added, “This is a risk signal, and volatility may increase again in January next year.” I looked ahead.
The number of continued unemployment claims in the U.S. released on this day was the highest in three years, showing signs of a slowdown in the labor market. According to the U.S. Department of Labor, the number of ongoing unemployment claims for the week of December 8 to 14 was 1.91 million, exceeding both the previous week’s revised figure (1.864 million) and the market forecast (1.88 million). This is the highest level in three years. Last week (December 15-21), the number of new unemployment claims was 219,000, which was lower than both the previous week’s revised figure (220,000) and expert expectations (223,000).
Eliza Winger, an economist at Bloomberg Economics, analyzed, “As the unemployment period of laid-off workers continues to prolong, the number of unemployment claims continues to surge,” adding, “This shows a slowdown in the labor market.”
International oil prices fell as expectations for additional economic stimulus measures from China weakened. West Texas Intermediate (WTI) closed at $69.62 per barrel, down $0.48 (0.68%) from the previous day, and Brent crude oil, the global crude oil price benchmark, closed at $73.26 per barrel, down $0.32 (0.43%).
New York (USA) = Correspondent Haeyoung Kwon roguehy@asiae.co.kr
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