[New York Stock Market Briefing] Rebound on Trump’s 'TACO'… Tesla jumps 3.5% on 'terafab' expectations

Major New York stock indexes rebounded after U.S. President Donald Trump said he was in talks with Iran and put off the previously flagged attack on Iranian power plants. However, the rebound narrowed as Iran denied holding talks with the U.S.

On June 23 (local time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 631.00 points (1.38%) from the previous session to 46,208.47, the Standard & Poor’s (S&P) 500 gained 74.52 points (1.15%) to 6,581.00, and the tech-heavy Nasdaq Composite jumped 299.15 points (1.38%) to 21,946.76.

The market climbed sharply from the open after President Trump said on his social media account before trading that the U.S. and Iran had held “very good and productive talks toward a complete and comprehensive resolution of hostilities.”

Earlier, on June 21, President Trump warned Iran that he would raze its power plants if it did not open the Strait of Hormuz within “48 hours.” But as concerns mounted that the situation could spiral if Iran retaliated against an attack on its power plants, he opted for “TACO” (TACO—Trump Always Chickens Out).

Speaking with reporters at a Florida airport, President Trump said, “Iran wants to make a deal, and we also want a deal,” but Iran denied any negotiations with the U.S. According to Iran’s state-run IRNA news agency, a Foreign Ministry spokesperson said that “during the past 24 days, in which the imposed war has continued, there have been no negotiations or talks of any kind with the United States.”

Still, New York stocks held their gains on relief that President Trump would not escalate the situation.

All major sectors in the New York market rose on the day. Consumer discretionary jumped 2.46%, while utilities, technology, energy, and industrials posted gains in the 1% range.

Broadcom and Tesla rose about 4%. Tesla in particular surged after Chief Executive Officer (CEO) Elon Musk declared he would build a terafab to produce artificial intelligence (AI) chips.

According to the CME FedWatch Tool, the federal funds futures market priced in a 12.8% probability of a 25bp rate hike by December. The figure at the prior session’s close was 25.4%. Meanwhile, the probability of rates being held steady rose to 73.0% from 64.0%.

The Cboe Volatility Index (VIX) fell 0.63 points (2.35%) from the previous session to 26.15.

Han Kyung-woo, Hankyung.com reporter case@hankyung.com