[New York Stock Market] FOMC Minutes and Employment Data Digested…Mixed Close in Flat Range

The three major indices of the New York Stock Exchange closed mixed in a flat range. They failed to find a clear direction while digesting the minutes of the December Federal Open Market Committee (FOMC) meeting and employment data.

On the 8th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 42,635.2, up 106.84 points (0.25%) from the previous session. The Standard & Poor's (S&P) 500 Index rose 9.22 points (0.16%) to 5,918.25, while the tech-heavy Nasdaq Composite Index fell 10.8 points (0.06%) to 19,478.88.

Before the market opened, news that President-elect Donald Trump was considering declaring a state of emergency to enforce universal tariffs moved the market.

According to CNN, Trump is considering declaring an economic emergency based on the International Emergency Economic Powers Act (IEEPA) enacted in 1977 to justify imposing universal tariffs. This law grants the president broad authority to control economic activities, such as trade with foreign countries, when a national emergency threatening the security or economy of the United States occurs.

This news led to a rise in bond yields, causing stock index futures to weaken. The higher the risk-free fixed rate, the less attractive tech stocks become.

Additionally, the minutes of the Federal Reserve's (Fed) December FOMC meeting released that day acted as a factor to dampen expectations for a rate cut. Most members judged that a gradual rate cut was appropriate, as monetary policy was already considerably accommodative.

Jeffrey Roach, chief economist at LPL Financial, analyzed, "The uncertainty surrounding Trump's policies is still ongoing, making it increasingly difficult for forecasters to model the path of rates, growth, and inflation," adding, "If non-farm employment shocks on the 10th, the market could be shaken."

However, news that private employment weakened, falling short of market expectations, led bond yields to give up their gains, and stock index futures returned to flat.

According to the ADP National Employment Report, private employment increased by 122,000 in December last year. This fell short of both the previous month's increase of 146,000 and the market expectation of 140,000.

Christopher Waller, a representative hawk within the Fed, also supported stock prices by stating that disinflation (a slowdown in the inflation rate) is clearly appearing and that he would support further rate cuts if there is progress on inflation.

Waller said in a public statement that day, "Progress is uneven, as we saw when inflation temporarily increased a year ago, but if we level out the recent upward trend, disinflation becomes more apparent."

Major tech companies also showed no clear direction that day. The 'Magnificent 7,' referring to seven giant tech companies, all closed in a flat range.

AMD fell more than 4% due to HSBC's downgrade of its investment outlook. Quantum computing-related stocks like IonQ and Rigetti plummeted around 40%. This was due to NVIDIA CEO Jensen Huang's remark that it would take 20 years for a practically useful quantum computer to emerge.

eBay jumped more than 9% on news that Meta is testing its listings on Facebook Marketplace. If the test passes, when purchasing a product on Facebook, buyers will be directed to the eBay website to complete the transaction.

In the U.S., the number of new unemployment insurance claims decreased over the week, showing stability in the job market. According to the Department of Labor, the number of people who newly claimed unemployment insurance for the week ending January 4 was 201,000 on a seasonally adjusted basis. This is a decrease of 10,000 from the previous week and below the market expectation of 218,000.

By sector, all sectors except energy, communication services, and utilities rose. However, none rose more than 1%.

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability that the Fed will hold the benchmark interest rate this month is 95.2%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) recorded 17.7, down 0.12 points (0.67%) from the previous session.

Reporter Goh Jung-sam, Hankyung.com jsk@hankyung.com