NYSE closed lower due to concerns over an early tightening of the U.S. Federal Reserve. On the 6th (U.S. Eastern Time), the Dow Jones 30 Industrial Average closed at 36236.47, down 170.64 points (0.47%) from the previous day. The Standard & Poor’s (S&P) 500 index closed at 4696.05, down 4.53 points (0.10%) from the previous day, and the technology-oriented NASDAQ index closed at 1,580.86, down 19.31 points (0.13%) from the previous day.
The aftermath of the Federal Open Market Committee’s minutes in December last year, which was released the previous day, continued until this day, dampening the risk preference sentiment in the financial market. In the December FOMC minutes, participants mentioned that interest rates could be raised “early or at a faster pace,” and discussed the issue of reducing balance sheets. The financial market is reflecting the possibility of a rate hike as early as March this year.
Fed officials’ remarks on the same day also strengthened the market’s tightening vigilance. James Bullard, president of the Federal Reserve Bank of St. Louis, said the Fed could raise interest rates as early as March. “The Fed is accelerating the end of asset purchase stimulus measures and is in a good position to take the necessary measures to lower inflation,” he said adding, “The FOMC will be able to start raising interest rates as early as March to better control inflation.”
NYSE continued to rise and fall during the day, showing great volatility. As the major index fell sharply the previous day, the major index rebounded during the day, but it increased its fall after turning downward again at the end of the day. By industry, health, technology, and consumption-related stocks led the decline. However, energy and financial stocks were strong due to rising interest rates and rising oil prices. Stock market experts predicted that the stock market could continue to remain sluggish for the time being due to fears of austerity, but sentiment could recover if concerns calmed down.
According to the Chicago Mercantile Exchange Fedwatch, the Federal Fund (FF) interest rate futures market predicted a 75.1% chance that the Fed would raise interest rates in March this year. The possibility of an increase in May was 85% and the possibility of an increase in June was 95.9%. On the CBOE, the volatility index (VIX) fell 0.12 points (0.61%) from the previous day to 19.61.
