[New York Stock Exchange] S&P 500 Turns Positive for the Year... U.S.-China Trade Agreement, Nvidia Surge

Big US-China Tariff Deal, April CPI Slows
Nvidia Jumps 5.6% on Saudi AI Chip Supply
S&P 500 Erases Yearly Losses, Turns Positive
PPI and Retail Sales Data to Be Released on May 15

The three major indices on the New York Stock Exchange ended mixed on the 13th (local time). Following news of a trade agreement between the United States and China and inflation data that came in below expectations, semiconductor stocks such as Nvidia?which benefited from economic cooperation between the United States and Saudi Arabia?surged, leading to gains in the S&P 500 and Nasdaq indices. In particular, the S&P 500, the representative index of the U.S. stock market, turned positive for the year, fueling optimism in the equity market.

Reuters Yonhap News

On this day, the blue-chip Dow Jones Industrial Average (Dow) closed at 42,140.43, down 269.67 points (0.64%) from the previous session. The large-cap S&P 500 rose 42.36 points (0.72%) to 5,886.55, while the tech-heavy Nasdaq climbed 301.74 points (1.61%) to 19,010.08. The S&P 500, which had fallen as much as 17% earlier this year due to tariff impacts, erased all its previous losses with today's rally and turned to a cumulative gain of 0.1% for the year.

By stock, Nvidia soared 5.63%. Jensen Huang, CEO of Nvidia, attended the U.S.-Saudi Investment Forum in Riyadh during President Donald Trump's Middle East tour and announced that Nvidia would supply more than 18,000 of its latest artificial intelligence (AI) chips to the local company Humane. AMD also rose 4.01% on news that it would supply semiconductors to Humane alongside Nvidia. Another semiconductor stock, Broadcom, jumped 4.89%. Microsoft (MS), which announced plans to cut 3% of its total workforce, ended flat.

The United States secured a large package of deals from Saudi Arabia on this day. President Trump met with Saudi Crown Prince Mohammed bin Salman and signed a strategic economic partnership agreement that includes $600 billion (about 850 trillion won) in investments, exports, and enhanced security cooperation. After the meeting, he stated, "Through this visit, we have secured more than $1 trillion in additional Saudi investment and product purchases," adding, "Investment and jobs will explode in the United States, and the stock market will rise further."

Tariff-induced inflationary pressure appeared to be limited. Last month, the U.S. Consumer Price Index (CPI) rose 2.3% year-on-year, marking the lowest level in four years and two months since February 2021. This was below both the March figure and the market forecast (both at 2.4%). This CPI report is the first to reflect the effects of President Trump's imposition of a 10% base tariff on all trading partners in early April. Companies stockpiled inventory before the tariff hikes, and since the increased costs have not yet been fully passed on to consumer prices, the direct impact of the tariff policy has so far been limited. However, there remains the possibility that inflation could reignite depending on how quickly companies deplete their inventories and the results of tariff negotiations scheduled through July.

This CPI report was released just one day after news of the U.S.-China trade agreement. The two countries held their first official trade talks in Geneva, Switzerland, on May 10-11 and agreed to lower their mutual tariff rates by 115 percentage points over the next 90 days. As a result, the U.S. tariff rate on Chinese goods will drop from 145% to 30%, and China's tariff rate on U.S. goods will fall from 125% to 10%. With the two sides, which had been engaged in a trade war resembling a game of chicken, entering a ceasefire mode, optimism is growing about the possibility of further agreements in the future.

Jamie Cox, managing partner at Harris Financial Group, predicted, "With trade news, large-scale semiconductor deals with Saudi Arabia, and slowing inflation bringing the timing of rate cuts closer, and with concrete details on future tax cuts expected to be added, the market will become one that fully embraces risk."

This week, a series of inflation and consumption indicators will be released. On May 15, the April Producer Price Index (PPI) and retail sales figures?which serve as a backbone for the U.S. economy, accounting for two-thirds of economic activity?will be published. As tariffs have begun to dampen household and corporate sentiment, the key question is whether the effects of tariffs are now being reflected in U.S. inflation and retail sales data.

U.S. Treasury yields remained firm. The 10-year Treasury yield, the global benchmark for bond rates, rose 2 basis points (1bp=0.01 percentage points) from the previous session to 4.48%, while the 2-year Treasury yield, which is sensitive to monetary policy, remained at the previous day's level of 4.0%.