U.S.-China trade truce hopes… New York market's three major indices hit record highs

Expectations of a Fed rate cut during the week and big tech earnings also join in

Semiconductor stocks regain upward momentum

With growing prospects of a trade truce between the United States and China, expectations of a rate cut by the Federal Reserve, and optimism about corporate earnings, U.S. markets rose to record highs on the 27th (local time). While risk assets climbed, bonds, gold, and the dollar fell.

At the opening of the New York market that day, the S&P500 was up 0.9% at 6,857.31, the Nasdaq-100 rose 1.4%, and the Dow Jones Industrial Average gained 0.7%. All three major indices reached intraday record highs. By 10:10 a.m. Eastern Standard Time, similar levels of gains were being maintained.

The 10-year Treasury yield rose 2 basis points (1bp=0.01%) to 4.02%, and the 2-year yield increased 2bp to 3.50%. Spot gold fell 2% to 4,029.92 dollars an ounce.

Bitcoin rose 1.6% to 115,203.01 dollars, and ether traded up 2.5% at 4,165.77 dollars.

Semiconductor stocks, which had been hit hardest by tensions with China, led the gains. NVIDIA rose 2%, and Broadcom and AMD also gained. Qualcomm, which announced a new artificial intelligence (AI) accelerator, jumped nearly 7%.

Tesla shares rose 2.8%, and Apple also gained 1.4%.

This week, U.S. President Trump and Chinese President Xi Jinping are holding a summit in South Korea, raising expectations for a trade agreement between the two countries. Added to this are positive expectations for a 0.25% rate cut at the Fed meeting and for the earnings of five of the Magnificent Seven companies.

Treasury Secretary Scott Bessent said at the ASEAN summit in Kuala Lumpur, "We have a successful framework for leaders to discuss on Thursday." The agreement is reported to include a delay in China's rare earth export restrictions, the planned 100% tariff increase on Chinese goods by President Trump from November 1, and the resumption of China's imports of U.S. soybeans. The agreement may also include a resolution for the dispute over the U.S. operations of China's social video app TikTok.

Clark Bellin of Belware Wealth said, "As U.S.-China trade tensions ease, some of the uncertainty in the stock market is being alleviated."

According to Bloomberg, S&P500 companies are expected to beat analysts' consensus revenue in 69% of cases this quarter, the highest since 2021. This suggests that U.S. firms have not been significantly affected by tariffs so far. Companies appear to be maintaining margins through strategies such as early shipments before tariffs take effect, cost cuts, and price increases. Strategists say the strongest earnings and revenue growth remain concentrated in tech stocks.

Guest reporter Jeong-A Kim kja@hankyung.com