[New York Stock Market] S&P 500 Hits New Record High Again... Focus on Ukraine War Peace Talks and FOMC Minutes

Intel Surges 16% on Reports of Business Unit Sale
U.S. and Russia Hold Peace Talks in Saudi Arabia; Ukraine Voices Opposition
FOMC Meeting Minutes to Be Released on the 19th

The three major indices of the U.S. New York Stock Exchange all closed slightly higher on the 18th (local time). Investors monitored the peace negotiations between the U.S. and Russia regarding the Ukraine war, considering various factors affecting the stock market such as tariffs and inflation, and took a wait-and-see approach. The S&P 500 index hit an all-time high.

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On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average (Dow) closed at 44,368.56, up 10.26 points (0.02%) from the previous trading day. The large-cap-focused S&P 500 index rose 14.95 points (0.24%) to close at 6,129.58, setting a new record high. The tech-heavy Nasdaq index closed at 20,041.26, up 14.49 points (0.07%).

Among individual stocks, Intel surged 16.06%. The news that Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), and U.S. semiconductor company Broadcom are considering acquiring some business units of Intel, which is facing management difficulties, pushed the stock price up. Nvidia rose 0.4%. Microsoft (MS) increased by 0.3%, while Alphabet, Google's parent company, fell 0.57%. Tesla declined by 0.49%.

The market fluctuated within a narrow range without a clear direction and ended the session with a slight rise across the board. On that day, the U.S. and Russia held a high-level meeting in Riyadh, the capital of Saudi Arabia, to discuss ending the Ukraine war. This was the first ministerial-level negotiation since the second Trump administration took office. Both sides agreed to form high-level negotiation teams and expand cooperation for post-war reconstruction of Ukraine. They also discussed lifting sanctions against Russia. The expectation of peace acted as a catalyst stimulating investor sentiment.

However, by 'passing over' Ukraine, the direct party to the war, as well as the European Union (EU), President Volodymyr Zelensky of Ukraine expressed strong dissatisfaction. He stated, "We were not invited to the U.S.-Russia meeting held in Saudi Arabia," and emphasized that "it is important that negotiations are not conducted behind the backs of the main parties."

Tim Graff, Chief Macroeconomic Strategist at State Street Bank and Trust Co., analyzed, "The possibility of ending the Ukraine war is very positive," adding, "At the core of all this is defense spending. It is expected to be beneficial not only for U.S. defense contractors but also for European defense companies."

Investors also paid attention to remarks made by Fed officials released that day. Mary Daly, President of the Federal Reserve Bank of San Francisco, stated at an event in Phoenix, "At this point, policy should remain restrictive until it is confirmed that progress on inflation continues."

Warnings about a potential bubble in AI stock prices were also issued. Michael Barr, Vice Chair for Supervision at the Fed, said at an event held in New York, "If reality does not meet expectations, market corrections could be triggered for companies that have made large investments in this technology," adding, "The U.S. economy experienced a surge in productivity during the late 1990s dot-com boom, but it was followed by bankruptcies, capital overhang, and a cautious corporate investment environment."

The key point to watch for the remainder of this week is the release of the minutes from the Federal Open Market Committee (FOMC) meeting in January, scheduled for the 19th. The Fed began easing monetary policy in September last year, cutting the interest rate three times from a peak of 5.25-5.5% to 4.25-4.5%, and then held rates steady for the first time last month. Following Fed Chair Jerome Powell's repeated statements that he would not rush rate cuts, the FOMC minutes are expected to provide additional hints about the future path of interest rates and offer insights into Fed officials' economic outlooks. Particular attention will be paid to the opinions of Fed officials regarding the impact of President Trump's tariff policies on inflation.

Remarks from Fed officials will continue to be released. On the 19th, a speech by Fed Vice Chair Philip Jefferson is scheduled. On the 20th, Chicago Fed President Austan Goolsbee and Fed Director Adriana Kugler will make public remarks.

With inflation rising unexpectedly last month and retail sales declining more than expected, investors anticipate that the Fed will keep rates steady for the time being. According to the CME FedWatch tool, the federal funds futures market on that day reflected a 97.5% probability that the Fed will hold rates steady in March. The likelihood of maintaining rates in May is 86.1%, and in June, 55.4%.

Steve White, Chief Investment Strategist at BOK Financial, said, "As inflation becomes a story for 2026, the possibility that the Fed will change course next year is not zero," adding, "This is not yet reflected in asset values at this point. I am optimistic rather than pessimistic, but I think we need to be more realistic."

U.S. Treasury yields are strong. The 10-year U.S. Treasury yield, a global benchmark for bond yields, rose 8 basis points (1 bp = 0.01 percentage points) to 4.55% from the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, increased 4 basis points to 4.3%. Expectations that European leaders will increase military spending have pushed bond yields higher, which in turn has driven U.S. Treasury yields upward.