[New York Stock Market] Mixed Close as Investors Remain Cautious Ahead of US-China Trade Talks

Cautious Sentiment Prevails Ahead of US-China Trade Talks in Switzerland

The three major stock indexes on the New York Stock Exchange ended mixed as investor sentiment struggled to find direction ahead of US-China trade negotiations.

AFP Yonhap News

On May 9 (local time), the blue-chip Dow Jones Industrial Average closed at 41,249.38, down 119.07 points (0.29%) from the previous session. The large-cap S&P 500 index finished at 5,659.91, down 4.03 points (0.07%), while the tech-heavy Nasdaq index ended at 17,928.92, up 0.78 points (0.00%).

The United States and China are set to hold high-level trade talks in Switzerland this weekend. It will be the first negotiation since US President Donald Trump imposed a 145% tariff on China. Most observers believe it will be difficult to achieve concrete results at this initial meeting. However, there is also hope that the two countries may agree to lower high tariffs, creating a thaw in relations.

President Trump's statement on his Truth Social account earlier in the day, saying "it seems appropriate to impose an 80% tariff on China," dampened such optimism. This suggests that even if negotiations go well, a significantly high level of tariffs may remain in place.

In the market, there is an expectation that the tariff rate on Chinese goods will be lowered to around 60% for now. An 80% tariff rate is higher than the market's short-term expectations. Given the uncertainty about the outcome of the first round of talks and how President Trump might respond, caution dominated the market on this day. Stocks fluctuated within a narrow range, briefly rising before quickly turning lower.

In the afternoon, the White House stated that there would be no unilateral tariff reduction for China. White House spokesperson Caroline Levitt said, "President Trump still maintains his position that he will not unilaterally reduce tariffs on China," adding, "Concessions from China are also necessary."

Mark Hackett, chief market strategist at Nationwide, said, "This week's progress was encouraging, but we are still in the ups and downs of the news cycle, which is driving market reactions," adding, "Until concrete results emerge, volatility is likely to remain sideways."

There were no major economic indicators released on this day, but several key officials from the Federal Reserve made public statements. John Williams, President of the Federal Reserve Bank of New York, emphasized, "The higher the level of uncertainty, the more important it is for central banks to anchor expectations that inflation will remain stable," stressing that maintaining expected inflation close to policy targets is a fundamental role of the central bank.

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, projected that "the US economy will be less resilient than expected at the beginning of the year."

Michael Barr, a Federal Reserve governor, expressed concern that "due to the imposition of tariffs, inflation in the US will rise starting at the end of this year, and economic growth in both the US and abroad will decline," warning that tariff increases could exert sustained upward pressure on inflation.

By sector, energy rose more than 1%, while healthcare fell more than 1%. Among the 'Magnificent 7'?the seven major tech companies?Tesla jumped more than 5%. The remaining stocks stayed flat. Ride-hailing company Lyft saw its share price surge 28% after announcing plans to expand its share buyback program.

According to the CME FedWatch Tool from the Chicago Mercantile Exchange, the probability of the federal funds rate remaining unchanged in June, as reflected in the federal funds futures market, stood at 82.8%, the same level as at the previous day's close. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) closed at 21.90, down 0.58 points (2.58%) from the previous session.