[New York Market Briefing] Mixed session as banks post strong earnings amid US-China concerns

The three major U.S. stock indexes ended mixed after showing intense volatility. With trade tensions between the United States and China still unresolved, strong bank earnings and hopes for rate cuts became intertwined, creating a turbulent picture.

On the 15th (local time) at the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average closed at 46,253.31, down 17.15 points (0.04%) from the previous session. The Standard & Poor's (S&P) 500 index closed at 6,671.06, up 26.75 points (0.40%), and the Nasdaq Composite closed at 22,670.08, up 148.38 points (0.66%).

Seo Sang-young, a researcher at Mirae Asset Securities, said, "The U.S. market opened higher supported by solid financial sector earnings despite U.S.-China frictions. Treasury Secretary Besent's moderate remarks toward China were also positive," adding, "but after remarks by Fed Governor Steve Myron, rising yields widened and selling pressure emerged in the stock market."

He analyzed, "The fact that options expiration is approaching and anxiety over U.S.-China conflict appear to have served as triggers for the sell-off," and added, "however, semiconductor companies showed a solid trend, reflecting expectations for the AI industry through remarks by Fed Governor Waller, resulting in a mixed close."

The United States and China remain tense over trade. Since the previous day, both countries began charging port entry fees on each other's vessels, and U.S. President Donald Trump said he is considering suspending imports of Chinese edible oil.

Although Trump has not yet withdrawn his statement that he will impose a 100% tariff on China from November 1, members of the Trump administration have continued to pressure China through the media.

Remarks by Fed Governor Steve Myron were also a burden. He argued that "because the neutral rate has fallen, current monetary policy is more restrictive than generally perceived," emphasizing the need for rate cuts, but cautioned that "the disagreement with colleagues is about the 'speed' of cuts, and I do not see a need for a large cut of more than 50bp," recommending a cautious approach. Regarding U.S.-China conflict, he warned that "it is a serious issue, and if the threat materializes there would be substantial economic downside risks, and the risk factors for the economic outlook have changed compared with a week ago."

Meanwhile, strong bank earnings indicated a solid economy and helped improve investor sentiment. Banks typically report earnings earlier than major companies and act as an economic barometer. Morgan Stanley's third-quarter earnings per share (EPS) and revenue both significantly exceeded market expectations.

Fed Governor Waller's remarks, which raised expectations for the AI industry, worked positively. He analyzed AI innovation from the perspective of "creative destruction," expressing optimism that "in the long term the benefits in terms of productivity improvements and improved living standards will be overwhelming." He particularly projected that AI could bring sustained productivity growth of more than 2%, raising real incomes without inflation and even improving unmeasured quality-of-life values in GDP.

Because both positive and negative factors flowed into the market at the same time, stock indexes swung wildly between extremes.

The S&P 500 at one point expanded gains to 1.2%, then plunged to -0.48% intraday, before closing with about a 0.4% gain.

NVIDIA, Microsoft, and Amazon were slightly down. Alphabet, Broadcom, and Oracle rose around 2%.

The banking sector was broadly strong. JPMorgan Chase rose nearly 2%, Bank of America climbed more than 4%, and Morgan Stanley jumped over 4%.

The Philadelphia Semiconductor Index surged 3%. TSMC rose 3% ahead of its earnings announcement, ASML gained 2.71%, and AMD surged 9.4%, bringing its market capitalization close to $400 billion.

Min-kyung Shin, Hankyung.com reporter radio@hankyung.com