[New York Stock Market Briefing] Bargain Hunting Despite Trump-Zelensky Clash... Dow Up 1.4%

Major indices in the New York stock market all successfully rebounded. Despite U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky publicly clashing on the 28th (local time) over Ukraine peace negotiations, strong bargain hunting flowed in as investors focused more on excessive declines ahead of month-end settlements.

On the 28th (local time), the Dow Jones Industrial Average closed at 43,840.91 on the New York Stock Exchange (NYSE), up 601.41 points (1.39%) from the previous session. The Standard & Poor's (S&P) 500 index finished 92.93 points (1.59%) higher at 5,954.50, while the Nasdaq Composite rose 302.86 points (1.63%) to close at 18,847.28.

The New York stock market sought a rebound from the previous day's sharp decline from early in the session. The Nasdaq had exceeded 20,000 on the 21st but fell to 18,544 in just five trading days, marking a steep decline. Analysts suggest this highlighted the appeal of bargain hunting amid perceptions of excessive drops.

However, indices that had been maintaining their rebound momentum early in the session gave up all their gains due to uncertainty concerns after news that Trump and Zelensky ended peace negotiations amid a heated exchange.

Trump discussed Ukraine war peace plans and mineral stakes with Zelensky at the White House today. However, after publicly arguing with Zelensky in front of the press, Trump continued to clash during the 45-minute meeting, ultimately resulting in failed negotiations.

Immediately after the meeting, Trump posted on his social media platform Truth Social, "I determined that President Zelensky is not ready to make peace with American involvement," adding, "He can come back when he's ready for peace."

Following this news, stock indices sharply declined, giving up all their gains. However, bargain hunting revived in the afternoon, leading to a surge near the close.

Nevertheless, observers suggest the Trump-Zelensky clash will continue to be a negative factor for the market.

Jim Lebenthal, investment strategist at Cerity Partners, explained, "If U.S. foreign policy is now empowering Russia and President Vladimir Putin, I don't think that's good for the stock market," adding, "It's not good for the global economy either."

Larry Tentarelli, founder of Blue Chip Daily Trend Report, said, "If there are signs that the Russia-Ukraine conflict will expand or remain unresolved, volatility will increase," adding, "High volatility can be expected at any time until the issue is resolved."

The Personal Consumption Expenditures (PCE) price index, preferred by the Federal Reserve, met market expectations and showed a steady trend. According to the U.S. Department of Commerce, the core PCE price index excluding volatile food and energy for January rose 0.3% from the previous month. This was slightly higher than the previous month's 0.2% increase but matched market expectations. Year-over-year, the core PCE price index rose 2.6%, also in line with expectations.

Notably, personal consumption expenditures by Americans decreased. Consumer spending fell by $30.7 billion (0.2%) from the previous month. This turned negative from the revised previous month's figure (0.8% increase). Real PCE, which accounts for inflation, decreased by 0.5%, recording the largest monthly decline since February 2021 (-1.0%), about four years ago.

In relation to this, the possibility of negative growth in the U.S. economy in the first quarter has been raised. The Atlanta Federal Reserve's 'GDP Now' model, which estimates U.S. economic growth in real-time, suggested a Q1 growth rate of -1.5% quarter-on-quarter on an annualized basis. This is 3.8 percentage points lower than the 2.3% recorded on the 19th. It's the lowest since estimates for Q1 growth began on January 31 (2.9%).

The Atlanta Fed explained part of the background, noting that the real PCE growth rate for Q1 was lowered from 2.3% to 1.3%. The last time the U.S. economy experienced negative growth was in Q1 2022 (-1.0%).

By sector, all industries except materials and real estate rose more than 1%, showing a broad-based strength.

All of the 'Magnificent 7' tech giants rose. Nvidia, which had plunged more than 8% the previous day, rebounded nearly 4%, while Tesla jumped 3.91%. Apple, Microsoft, Amazon, Meta, and Alphabet all gained in the 1% range.

The Philadelphia Semiconductor Index also successfully rebounded, but its 1.71% gain fell short of recovering the previous day's 6.09% drop. It would be an overstatement to say that investor sentiment toward semiconductor and artificial intelligence (AI) related stocks has recovered.

Berkshire Hathaway B rose 2.27% today, setting another all-time high. Berkshire's stock has risen more than 11% this year, significantly outperforming the S&P 500 index.

According to the CME FedWatch Tool, concerns about economic slowdown have reduced the probability of interest rates remaining unchanged in the first half of the year to 19.4%. It was 30.1% at the end of the previous day. Instead, the probability of a 0.5 percentage point increase rose from 16.0% to 22.2%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) recorded 19.63, down 1.50 points (7.10%) from the previous session.

Jeong Sam Ko, Hankyung.com reporter jsk@hankyung.com