Ahead of FOMC, U.S. stocks: S&P500 breaks record high

Tesla on Musk buy, Alphabet also surpasses $3 trillion market cap

Ahead of expectations for the Federal Reserve Board's first rate cut, U.S. stocks rose on the 15th (local time), pushing the S&P500 to another record high. President Trump saying that U.S.-China tariff talks were progressing smoothly also had a positive effect on market sentiment. Alphabet surpassed a $3 trillion market capitalization.

At 10 a.m. EST, the S&P500 rose 0.4% to 6,610 points, breaking its record. The Nasdaq was up 0.67%. The Dow Jones Industrial Average was trading around the same level as last Friday.

The 10-year Treasury yield fell 1 basis point (1bp=0.01%) to 4.043%. The policy-sensitive 2-year yield dropped to 3.533%, down 2.5bp, approaching its lowest level since 2022.

The Bloomberg dollar spot index fell 0.2%. The Japanese yen rose 0.3% to 147.29 per dollar.

Tesla jumped more than 7% that day. CEO Elon Musk disclosed in a filing that last week he bought 2.57 million shares, totaling nearly $1 billion, on the open market. This was his first purchase in five and a half years since February 2020 and the largest insider purchase. With consecutive gains following last Thursday and Friday, Tesla rose more than 20% over three days.

Investors viewed the purchase as Musk's show of confidence in a company focusing on robotics amid intensifying electric vehicle competition.

Shares of Alphabet, Google's parent company, rose more than 4% that day, pushing Alphabet past a $3 trillion market valuation and making it the fourth U.S. company to exceed $3 trillion after Nvidia, Microsoft, and Apple.

Nvidia fell 1.5% that day after Chinese regulators announced a preliminary probe finding potential antitrust violations in its 2020 acquisition of Mellanox.

U.S. and Chinese senior officials discussed tariffs and the deadline for the sale of Chinese social media firm TikTok for a second day. In a post on Truth Social, President Trump said trade talks between the two countries were progressing well and that he would speak with President Xi Jinping on the 19th. He added, "An agreement has also been reached on a 'certain' company that American young people desperately want," which appears to refer to TikTok.

Reuters quoted a senior U.S. official familiar with the talks as saying that if China does not give up demands for tariff cuts and technology restrictions, the U.S. will push ahead with a TikTok ban.

According to the CME FedWatch tool, the interest rate swap market is pricing a 96% probability of a 0.25% point cut by the Fed. The probability of a big cut (0.5% point cut) is only 3.6%.

Brian Buettel of UBS Wealth Management forecasted, "The labor market has weakened and inflation appears contained, so rate cuts will begin this week and total four cuts amounting to 100bp through January 2026."

Guest reporter Jeong-A Kim kja@hankyung.com