New York stock market falls due to rise in U.S. Treasury yields… 10-year interest rate exceeds 4.6%

Return of the increase on the 24th… Keep an eye on whether there will be a Santa Rally or not
U.S. unemployment claims continue to be the highest in three years

The three major indices of the U.S. New York stock market are falling in early trading on the 26th (local time). The New York stock market, which rose by about 1% on the previous trading day ahead of the Christmas holiday, is giving back the previous trading day’s gains as investor sentiment weakens due to the rise in U.S. Treasury yields.

As of 10:40 a.m. on this day in the New York stock market, the blue chip-centered Dow Jones Industrial Average (Dow Index) was recording 43,201.05, down 0.22% from the previous day. The S&P 500 index, centered on large-cap stocks, is trading at 6,029.24, down 0.18%, and the Nasdaq index, centered on technology stocks, is trading at 25.68, down 0.13%.

Rising U.S. Treasury yields weighed on investor sentiment. As the Treasury Department prepares to issue 7-year maturity bonds worth $44 billion, interest rates on government bonds have risen. The interest rate on U.S. 10-year Treasury bonds, a global bond interest rate benchmark, is trading at 4.63%, up 4bp (1bp = 0.01% point) from the previous day, and the interest rate on U.S. 2-year Treasury bonds, which are sensitive to monetary policy, is trading at 4.36%, up 3bp from the previous day.

The market’s attention is focused on whether the Santa Rally, in which stock prices rise during the last five trading days of the year and the first two trading days of the year, will unfold again this year. The New York stock market, which was closed for Christmas the day before, rose all at once on the 24th. The Dow rose 0.91%, and the S&P 500 and NASDAQ jumped 1.1% and 1.35%, respectively, raising expectations for a Santa rally. However, as the New York stock market gave back its gains in just one day, there is a difference of optimism and caution regarding the Santa rally. Whether or not there will be a Santa Rally will have a significant impact on the pitching in January of the following 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.

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.”

By stock, Alibaba is rising 1.04%. 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 is rising 0.18%. 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 is down 0.9% and Tesla is down 0.66%.

International oil prices are rising due to expectations of additional economic stimulus measures from China and analysis of a decline in U.S. crude oil inventories. West Texas Intermediate (WTI) is trading at $70.72 per barrel, up $0.62 (0.9%) from the previous day, and Brent crude oil, the global crude oil price benchmark, is trading at $74.06 per barrel, up $0.48 (0.7%).

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