[New York Stock Market] Russia-Ukraine Tensions, Mixed Close Amid Nvidia Earnings Expectations... Nasdaq Up 1%

Ukraine Fires Long-Range Missiles at Russian Mainland
NVIDIA Surges 4.89% on 20th Earnings Release
Government Bond Yields Fall Amid Safe-Haven Demand

The three major indices of the U.S. New York Stock Exchange closed mixed on the 19th (local time). Although geopolitical tensions escalated as Ukraine attacked Russian mainland with long-range missiles supported by the U.S., investors grew their expectations while awaiting the AI superstar Nvidia's earnings announcement to be released the next day.

Yonhap News

On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 43,268.94, down 120.66 points (0.28%) from the previous trading day. The large-cap-focused S&P 500 rose 23.36 points (0.4%) to 5,916.98, and the tech-heavy Nasdaq Composite increased by 195.66 points (1.04%) to 18,987.47.

By individual stocks, Nvidia, which is scheduled to announce earnings this week, jumped 4.89%. Walmart, which posted better-than-expected results, rose 3%. Super Micro Computer surged 31.24% on expectations that it would avoid delisting from Nasdaq following the appointment of a new auditor. Alphabet, Google's parent company, rose 1.57% despite the Department of Justice's push to force the sale of the Chrome browser. Earlier, the U.S. Department of Justice decided to request the court to compel Google to divest Chrome for violating antitrust laws.

Early in the day, investor sentiment was dampened as Ukraine attacked Russian territory with ATACMS missiles supported by the U.S. The Russian Ministry of Defense stated that it intercepted 5 out of 6 ATACMS missiles launched by Ukraine. In response, Russia even played the "nuclear card." Russia revised its nuclear use doctrine to allow the use of nuclear weapons against non-nuclear states supported by nuclear powers, a move effectively targeting Ukraine. As a result, the New York stock market started off with a broad decline but later gave back most of the losses as expectations for Nvidia's earnings grew.

Keith Lerner, Co-Chief Investment Officer (CIO) at Truist, analyzed, "The fundamental trend of the market is positive. Geopolitical issues are certainly risks, but the selling pressure from investors is moderate and does not appear to be panic-driven. It seems that recent profits have been realized."

Investors focused on Nvidia's earnings, which are just one day away. If Nvidia reveals better-than-expected earnings and future outlook after the market closes on the 20th, it is expected to provide a rebound opportunity in the market, which has cooled off after the Trump rally. Wall Street is closely watching demand forecasts for Nvidia's latest AI chip, Blackwell.

Looking at the corporate earnings announced so far, they have been relatively solid. According to market research firm FactSet, 93% of S&P 500 companies have reported quarterly earnings. Among them, three-quarters exceeded earnings per share (EPS) expectations, and 60% surpassed revenue forecasts.

Wall Street opinions diverge on the future direction of the stock market. The previous day, Morgan Stanley predicted that the S&P 500 index would rise 10% next year due to pro-business policies in a potential second Trump administration. On the other hand, RBC Capital Markets observed that a downturn has already begun due to concerns over tariff policies under a second Trump term, forecasting that the S&P 500 could fall by up to 10%.

Gaurav Malik, CIO of Palisade Capital Advisors, stated, "The escalation of geopolitical tensions has been a risk to the market and will continue to be so. As Russia intensifies its war rhetoric and uncertainty increases regarding the U.S. administration's response, market volatility is expected going forward."

With the rise in geopolitical tensions, the preference for safe assets such as government bonds has strengthened, causing bond yields to decline. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 2 basis points (1bp = 0.01 percentage points) from the previous day to 4.39%. The U.S. 2-year Treasury yield, sensitive to monetary policy, traded around the previous day's level of 4.28%.