New York Stock Exchange (Reuters = Yonhap News)
(New York = Yonhap News) Kim Hyun, Yonhap Infomax Correspondent = The New York stock market started the fourth quarter with a sharp decline on the first trading day of October, a month notorious for its volatility.
Investor sentiment appeared frozen following the White House announcement that Iran was preparing an attack on Israel. The strike by labor unions at ports in the southeastern and southern United States also added to anxiety, and new economic indicators suggesting that the manufacturing industry remains in a continuous decline also disappointed.
As of 10:35 a.m. on the New York Stock Exchange (NYSE) on the 1st (local time), the Dow Jones Industrial Average, a blue chip group, is recording 42,037.26, 292.89 points (0.69%) lower than the previous level.
The large-cap benchmark Standard & Poor’s (S&P) 500 index fell 66.03 points (1.15%) from the previous day to 5,696.45, and the NASDAQ composite index centered on technology stocks fell 341.90 points (1.88%) to 17,847.27.
The Russell 2000 index, which consists of small and mid-cap stocks, also fell 1.93%.
The three major indices ended the last trading day of September with an upward trend the previous day. It started off in a downward trend and moved narrowly in the flat range, but then the decline increased and then rebounded as Federal Reserve Chairman Jerome Powell’s comments regarding interest rate cuts were interpreted as hawkish. The Dow and S&P 500 indices finished September, commonly referred to as the ‘worst month of the year,’ strongly, setting new all-time closing records. All three major indices achieved ‘plus’ performance on a monthly and quarterly basis. In particular, it was the first time since 2019 that the S&P 500 showed strength in September.
However, on this day, all kinds of bad news poured out all at once.
A senior White House official disclosed to the media this morning that he had discovered Iran’s preparations for an attack on Israel and warned Iran that it would pay a severe price if it directly carried out an attack against Israel. The situation in the Middle East is heading toward an imminent crisis.
The new economic indicators announced on this day reaffirmed that the U.S. manufacturing industry continues to remain in a contraction phase.
The Institute for Supply Management’s (ISM) manufacturing PMI for September recorded 47.2. This figure is below market expectations (47.6).
PMI measures industry contraction and expansion based on 50.
ISM said, “The manufacturing industry has continued to contract for six consecutive months,” and “22 of the past 23 months have been in contraction.”
S&P Global’s September manufacturing purchasing managers’ index (PMI) was 47.3, showing a downward trend for three consecutive months.
In addition, investors are watching the U.S. port union strike. The port union in the eastern and southern regions, with about 45,000 members, protested against the breakdown of collective bargaining and decided to go on strike for the first time in 47 years and began the strike as of today. The impact of the strike may not be immediately felt by consumers, but the U.S. economy could lose hundreds of millions of dollars as supply chain disruption becomes inevitable.
Austin Goolsbee, President of the Federal Reserve Bank of Chicago, said in an interview with economic media outlet Fox Business the previous day that, in the worst case, the port union situation could have a negative impact on the Fed’s interest rate cut, adding, “Interest rates can only be normalized when the economy normalizes.” “There is,” he emphasized.
Among the large technology stock group ‘Magnificent 7’ on this day, only Meta (Facebook’s parent company) opened the market with a strong performance. The remaining six stocks all showed declines, with Apple and Tesla falling more than 3% and Nvidia and Microsoft falling more than 2%.
Super Micro Computer’s stock price, which began trading on this day at a 10-to-1 par price split, showed an upward trend of around 1% compared to the previous day.
Air cargo service companies were expected to benefit from the port union strike, but the stock price of FedEx, the two largest U.S. express delivery companies, fell by more than 1% and that of UPS fell by more than 2%.
Aerospace company Boeing’s stock price rose more than 1% after news broke that it was considering raising $10 billion in funds by issuing additional shares.
The volatility index (VIX) compiled by the Chicago Board Options Exchange (Cboe) rose to 19.97, up 3.24 points (19.37%) from the previous day.
According to the FedWatch tool of the Chicago Derivatives Exchange Group (CME Group), as of 10:30 a.m. on this day, the probability that the Federal Reserve will cut interest rates by an additional 25 basis points in November is 57.5%, and the probability of cutting interest rates by 50 basis points is 42.5%. reflected. The possibility of a 25bp cut, which had risen sharply due to Chairman Powell’s remarks excluding the big cut, fell back by 7.8% points compared to the previous day.
European stock markets are showing mixed results.
The German DAX index fell by 0.76%, the pan-European index STOXX600 fell by 0.53%, and the UK FTSE index rose by 0.36%.
International oil prices soared due to the escalating crisis of full-scale war in the Middle East.
The price of West Texas Intermediate (WTI) crude oil for November delivery, which is a nearby contract, is trading at $70.32 per barrel, up 3.15% from the previous trading session, and the global benchmark Brent crude oil price for November delivery is trading at $73.85 per barrel, up 3.00% from the previous trading session.
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