Major indices rise on news of AI chip export regulation repeal... Alphabet plunges 7% [New York Stock Exchange Briefing]

Fed Chair's "Increased Economic Uncertainty" Remarks Disappoint

First High-Level Meeting Between US and China Announced After Tariff Imposition

Investor Sentiment Recovers on News of AI Semiconductor Export Regulation Easing

On the 7th (local time), the New York Stock Exchange rose in unison. Although investor sentiment was dampened by the US Federal Reserve's (Fed) warning of the possibility of stagflation (economic recession with rising prices), the news of the repeal of artificial intelligence (AI) chip export regulations led to a successful rebound.

On this day, the Dow Jones Industrial Average closed at 41,113.97, up 284.97 points (0.70%) from the previous trading day. The Standard & Poor's (S&P) 500 index rose 24.37 points (0.43%) to 5,631.28, and the Nasdaq Composite Index closed at 17,738.16, up 48.50 points (0.27%).

Investor sentiment fluctuated due to the Federal Open Market Committee (FOMC) meeting results and remarks by Jerome Powell, the US Fed Chair. The US Fed held the FOMC on this day and diagnosed that economic uncertainty had increased due to President Donald Trump's tariff policy, and decided to keep the benchmark interest rate unchanged, stating that they would continue to monitor the economic situation.

The market interpreted this as an increased concern about stagflation and turned to a selling dominance.

Chair Powell said at a press conference held immediately after the FOMC, "Considering the scope and scale of the tariffs, the risks of rising inflation and unemployment are certainly expected to increase," and "My instinct is that the uncertainty about the future economic path has become extremely high. There is no need to rush (to cut rates)."

The US-China tariff negotiations and the news of the easing of AI semiconductor export regulations became factors reversing the indices.

The US and China will hold their first official trade negotiations in Switzerland on the 10th. From the US, Treasury Secretary Scott Besant and US Trade Representative (USTR) Representative Jamison Greer will attend, while from China, Vice Premier He Lifeng, who is in charge of economic affairs, will attend.

This meeting is the first high-level meeting between the two countries since the US raised tariffs on China to 145% and China retaliated by raising tariffs on the US to 125%.

Foreign media reports that the Trump administration will repeal the AI semiconductor export regulations introduced during the Joe Biden administration stimulated investor sentiment in the late session.

On the news that AI semiconductor regulations will be repealed, the Philadelphia Semiconductor Index, a collection of semiconductor stocks in the US stock market, rose 1.74%. Nvidia rose 3.1%, and Broadcom, ASML, and Qualcomm also jumped around 3% each.

Alphabet's stock price plunged more than 7%. It is interpreted that the negative impact was due to Apple's Eddy Cue, head of services, predicting that AI search engines will eventually replace standard search engines like Google. Cue said this in a lawsuit filed by the US Department of Justice against Alphabet.

Walt Disney jumped 10.76% after announcing subscriber growth for its streaming service and better-than-expected earnings.

Jungdong No, Hankyung.com reporter dong2@hankyung.com