New York Stock Market Digests Interest Rate Hike...Will It Succeed in Rebounding Through the Tightening Cloud?

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Major U.S. stock indices showed mixed performance, struggling to find a clear direction as they digested the shock of the Federal Reserve's (Fed) benchmark interest rate hike and labor and retail indicators. After the Fed raised interest rates for the first time since 2023, rebound buying, especially in tech stocks, flowed in, but macro tightening pressures limited the upside.

According to Barron's Live Coverage, a U.S. financial media outlet, on September 17 (local time), the New York stock market saw the Dow Jones Industrial Average weaken, while the Nasdaq Composite and S&P 500 indices attempted to rebound during the session, continuing a tight tug-of-war. The market, which had plummeted immediately after the Fed's decision to raise the benchmark interest rate by 0.25 percentage points, absorbed some of the shock, but caution about the possibility of further tightening within the year prevented investors from active buying.

U.S. weekly initial jobless claims and the latest economic indicators released on the day suggested that the job market remained robust. While concerns about a recession were somewhat alleviated, the robust economic conditions fueled worries that they could prolong the Fed's hawkish monetary policy stance, thereby stimulating upward pressure on Treasury yields.

By sector, large semiconductor and artificial intelligence (AI)-related big tech companies, including Nvidia (NVDA), led the rebound. In contrast, dividend-paying defensive sectors such as real estate and utilities, which are vulnerable to rising interest rates, and traditional bank stocks showed selling dominance amid expectations of further tightening, deepening the divergence across indices.

Wall Street experts predict that short-term volatility is inevitable until inflation pressures and the Fed's monetary tightening path become completely clear. They analyze that strong upward momentum across indices is unlikely until the impact of a high-interest rate environment on corporate earnings is confirmed.

[Key Summary of the Article]

-The New York stock market showed mixed performance, with the Dow falling and Nasdaq rebounding, as it digested the Fed's 0.25 percentage point interest rate hike.

-Robust employment indicators reduced recession fears but increased the burden of a prolonged Fed tightening.

-Large AI tech stocks like Nvidia attempted to rebound, while interest-rate-sensitive defensive stocks showed weakness.

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