U.S. stocks shrink some of their losses as Fed members say after falling on rising interest rates

U.S. stocks shrink some of their losses as Fed members say after falling on rising interest rates

The U.S. stock market fell on the back of solid economic indicators released the day before, highlighting that the Fed’s stance on rate cuts could be delayed. Furthermore, negative factors on some industries, such as Tesla’s (-4.90%) decline due to sluggish deliveries in the first quarter, and the decline due to government policies by insurers, were also affected. However, as Mester and Daley said in their speeches that the economy is solid, more data is needed, and the possibility of three rate cuts is not being ruled out, the fall seems to be shrinking. In general, the market narrowed some of its losses in the stock market (Dau -1.00%, Nasdaq -0.95%, S&P 500 -0.72%, Russell 2000 -1.80%, Philadelphia Semiconductor Index -1.51%)

• Variables: Economic indicators and Fed member comments

Interest rates on government bonds surged on the back of the ISM manufacturing index, which improved significantly the previous day, and factory orders rose 1.4 percent from 3.8 percent a month earlier. Of course, this is largely due to the mild weather in February, which came after the extreme cold in January, but it also shows the solidity of the U.S. economy. The number of job openings in February recorded 8.756 million, slightly exceeding the 87.48 million in the previous month. In detail, the financial and insurance sectors increased by 12.6 million, but the IT sector fell by 8.5 million. Other employment rose by 120,000 in the retail sector (78 million), but the manufacturing sector fell by 5.3 million. Turnover also increased by 110,000 in the retail sector (1.08 million). The number of layoffs increased by 128,000 in the leisure and hospitality sectors (123,000). Although generally solid, it shows that the job market is slowing down.

Meanwhile, a number of Fed members have spoken. First, Cleveland Fed President Loretta Mester said she expects inflation to improve slowly, which could lead to a rate cut later this year. However, she still said three rate cuts were reasonable. Daily San Francisco Fed President said that while the economy is solid, there is no need to rush to cut rates, three rate cuts are reasonable. Of course, this is only a forecast and can be revised at any time, he added. In addition, moderate remarks continued despite concerns that the ISM manufacturing index was solid the previous day, saying it would be a month’s figure and that it would be closely watched for continuity

In general, economic indicators show the solidity of the U.S. economy, but it is noteworthy that the job market is slowing down. In fact, Cleveland Governor Mester mentioned that the job market is slowing down, and many Fed members, including Powell, have made similar remarks recently. This shows that the solidity of economic indicators could weaken in the future. Although government bond rates rose today on solid indicators, the range was limited, and in CME FEDWatch, the probability of a rate cut in June rose from 57.9% the previous day to 63.5% today.

In the end, interest rates on government bonds continued to rise, reflecting the surprise improvement of the ISM manufacturing index and major economic indicators released on the same day. However, reflecting Fed members’ remarks, the rise was partially reduced and short-terms fell. The dollar weakened due to inflows of reversals from its five-month high. In particular, the U.S. dollar weakened after the announcement of the job posting. After the start of the decline, the stock market closed with a contraction of its fall after Fed members’ remarks

• Features: Electric vehicles, semiconductor industries slump

Tesla (-4.90 percent) fell sharply after the company posted weak results, with its first-quarter sales falling below the 450,000 expected to 4.33 million units. Rivian (-5.23%), Lucid (-3.50 percent), Nio (-2.16 percent), and Xpeng (-2.19 percent) also fell, highlighting concerns that demand could be weaker than expected in the wake of Tesla’s slump. In particular, electric truck maker Nikola (-4.48 percent) mentioned the legal conflict between the Securities and Exchange Commission and Milton Changrabha the previous day. In addition, secondary battery and charging facilities sectors such as Quantum Scape (-3.75%), Albemarle (-2.09%), and Blink Charging (-5.70 percent) were also sluggish.

Semiconductor-related stocks such as Nvidia (-1.01%), AMD (-2.53%), Micron (-1.25%), Broadcom (-0.85%), AMAT (-1.24%0, and RAM Research (-1.47%) fell on concerns that the Fed’s rate cut could be delayed. ASML (-2.64%) fell as Wells Fargo raised its target price, but was listed for sale across semiconductors. In addition, AI-related stocks such as Super Microcomputer (-2.63%), Arista Network (-2.97%) and C3.AI (-2.42%) were also listed for sale. The Philadelphia Semiconductor Index fell 1.51%

Insurance companies such as United Health (-6.44%), CVS Health (-7.21%), Humana (-13.41%), and Elvis Health (-3.25%) fell after the U.S. government announced an average increase in Medicare prices by 3.7 percent in 2025. Oilfield equipment maker ChampionX (+10.40 percent) is bullish on the news that Schlumberger (-0.98 percent) will buy it for $7.7 billion. Energy industries such as ExxonMobil (+1.96%), Chevron (+0.44%) and ConocoPhillips (+1.55%) are strong due to rising international oil prices.

GE Vernova (-1.42 percent) was strong after being spun off from GE and listed, but fell after being sold out in the second half of the market. Existing GE was maintained at GE Aerospace (-2.42 percent), and the stock also turned downward in the second half of the market. PVH (-22.22 percent), which has clothing brands such as Kevin Klein, reported good results, but plunged after the company lowered its outlook for the year to reflect the slowing European economy and a decline in consumption among low-income earners in the U.S. Healthcare clothing company Pigs (-7.42 percent) lowered its investment opinion, saying the BOA is facing a difficult retail environment. Petco (-6.73 percent), a pet goods company, also fell after the company lowered its investment opinion, citing a slowdown in its market share. Construction industries such as DR Horton (-3.85 percent), Lena (-3.18 percent), Pult Group (-3.57 percent), and KB Home (-3.11 percent) fell as concerns over poor performance were highlighted, reflecting the cold weather in January.

• South Korean stock market-related figures

The MSCI Korea Index ETF rose 0.11 percent and the MSCI Emerging Index ETF rose 0.32 percent. Meanwhile, the Russell 2000 index of smaller companies fell 1.80 percent, the Dow Transportation Index fell 1.15 percent, and the Philadelphia Semiconductor Index also fell 1.51 percent. Night futures were down 0.53 percent. The one-month NDF dollar/won exchange rate, which affects the dollar/won exchange rate, which closed at 1,352.10 won the previous day, reached 1,350.50 won

• FICC: International oil prices rise on increased Middle East risks

International oil prices rose as Israel’s attack on the Iranian consulate in Syria the previous day expanded geopolitical risks in the Middle East. Of course, oil prices rose due to expectations of an increase in demand due to improved manufacturing indicators in China and the United States, and the issue of production cuts in Mexico. Most energy items, including U.S. natural gas and gasoline prices, also rose

The dollar hit a five-month high on the previous day due to a surprise improvement in the ISM manufacturing index, but today it turned weak due to the inflow of reversals. In particular, although the job posting was announced solidly, the slowdown in employment is progressing considering the details, and the moderate mention of three rate cuts by hawkish members such as President Mester claiming that it is reasonable to cut the interest rate.

Treasury yields surged the previous day on the shock of the improvement of the ISM manufacturing index, and the trend continues to rise today. However, after the announcement of the employment announcement, the trend shifted to short-term stocks, and the fact that Mester and Daley argued that three rate cuts were reasonable also contributed to the short-term rate drop.

Gold and silver rose sharply as the weak dollar and increased geopolitical risks in the Middle East highlighted the preference for safe assets. Copper and nonferrous metals rose sharply, reflecting recent Chinese economic indicators as the LME market opened. Wheat fell on news that Russian wheat exports were on the rise after March gains. In particular, the U.S. Department of Agriculture predicted a record increase in Russian wheat production this year and highlighted that the world’s largest exports could continue, which is another reason for the decline in wheat prices. Soybean and other crops were also sluggish.