Expectations for US-China Trade Talks Amid Interest Rate Freeze Outlook... New York Stock Market Rises

AMD, Supermicro, Marvell Face Weak Stock Performance Due to Uncertain AI Earnings

On the 7th (local time), with the Federal Reserve Board's interest rate policy announcement scheduled, the US stock market started with gains due to expectations for the first trade talks between the US and China.

At 10:15 AM Eastern Standard Time, the S&P 500 and Nasdaq Composite Index each rose by 0.4%. The Dow Jones Industrial Average increased by 0.5%.

The 10-year Treasury yield remained almost unchanged at 4.29%. However, with the dominant possibility of the Federal Reserve freezing interest rates, the yield on the 2-year Treasury, a short-term bond, rose by 2 basis points (1bp=0.01%) from the previous day to 3.795%. The Bloomberg Dollar Spot Index, which had been weak for several days, rose by 0.2%. Spot gold traded at $3,383.43 per troy ounce, down 1.4%.

On this day, Walt Disney's stock surged over 9% as it reported a surprise increase in subscribers and exceeded expectations with its performance and outlook for the year. Uber, which reported earnings below Wall Street consensus, plummeted by 4%.

Advanced Micro Devices (AMD), a competitor of Nvidia in the AI chip sector, announced that its sales would decrease by $1.5 billion this year due to additional regulations on sales to China. AI server company Supermicro Computer presented a revenue outlook for the year that fell short of consensus. Marvell Technology also lowered its revenue outlook due to uncertain economic conditions, and its stock fell by more than 9%. Nvidia also showed weakness as the outlook for AI chip demand dimmed.

Investor sentiment recovered with news that US Treasury Secretary Scott Besant and USTR Representative Jamison Greer would meet with Chinese officials, including Vice Premier He Lifeng, in Switzerland this week.

At 2 PM (3 AM Korean time on the 8th), the Federal Reserve's interest rate announcement is expected to keep the current benchmark rate of 4.25%~4.50% unchanged. According to CME's FedWatch tool, interest rate traders are almost 100% reflecting the possibility of a rate freeze at this meeting.

Investors are watching Federal Reserve Chairman Jerome Powell's press conference after the decision, paying attention to the Fed's interpretation of future interest rates and the US economy. However, until clear results emerge on the impact of Trump's tariff policy, the Fed is expected to maintain a wait-and-see stance on the direction of interest rates.

Chris Brigati, Chief Investment Officer (CIO) of SWBC, said, "Because the tariff situation is unpredictable, the situation can change rapidly, and in a situation where the Fed's actions may not achieve their intended effect or amplify negative impacts, it is irresponsible for the Fed to actively respond to tariffs."

Guest reporter Jung-a Kim kja@hankyung.com