[New York Stock Exchange] Falls on Caution Ahead of Nvidia Earnings... Semiconductor Design Software Export Controls to China Weigh on Market

Cautious Sentiment Ahead of Nvidia Earnings
Nvidia Surpasses Market Expectations After the Close
US Considers Export Controls on Semiconductor Design Software to China
FOMC Minutes Highlight Concerns Over Conflict Between Inflation and Employment Targets

On May 28 (local time), all three major indices on the New York Stock Exchange closed lower, reversing the previous day's rebound. The market remained cautious and fluctuated throughout the session as investors waited for Nvidia's quarterly earnings report after the close. Late in the session, news that the Donald Trump administration was considering export controls on semiconductor design software to China weighed on the market.

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On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 42,098.7, down 244.95 points (0.58%) from the previous trading day. The S&P 500, which tracks large-cap stocks, fell by 32.99 points (0.56%) to 5,888.55, while the tech-heavy Nasdaq dropped 98.23 points (0.51%) to finish at 19,100.94.

By sector, Cadence Design Systems, a U.S. semiconductor design software company, plunged 10.67%. Reports that the Trump administration was considering restricting semiconductor design software exports to China triggered a wave of selling. Synopsys, another semiconductor design firm, fell 9.64%. Nvidia declined by 0.51%.

Market attention focused on Nvidia's earnings report, which was released after the close. Investors looked to Nvidia's results to gauge the profitability of artificial intelligence (AI) investments and to assess the impact of the U.S.-China trade war and export control measures against China. Nvidia posted revenue of $44.06 billion and earnings per share (EPS) of $0.96 for the first quarter of fiscal year 2026 (February to April 2025), beating market expectations. Previously, market research firm LSEG had projected Nvidia's revenue at $43.31 billion and EPS at $0.93.

James Demmert, founder and Chief Investment Officer (CIO) of Main Street Research, commented, "Wednesday's Nvidia earnings report is significant not only for Nvidia but for the entire stock market," adding, "It can energize overall investor optimism and help shift the focus to the power of artificial intelligence (AI), rather than the tariff and tax headlines coming out of Washington."

Investors also paid close attention to the minutes of the May Federal Open Market Committee (FOMC) meeting released by the Federal Reserve on this day. The minutes indicated that committee members agreed to hold off on interest rate cuts and to remain observant, as the two policy objectives?price stability and full employment?could come into conflict due to tariff policy. The minutes stated, "Participants noted that if growth and employment prospects weaken and inflation persists, the (Fed's two policy objectives) could face a difficult tradeoff," and added, "Given the increased uncertainty about the economic outlook, it is appropriate to take a cautious approach until the purely economic impacts of government policy changes become clearer."

Investors are also watching for signs of further U.S. trade negotiations. Optimism spread in the market that the tariff war could move away from its worst phase after President Trump decided on May 25 to postpone the effective date of a 50% tariff on the European Union (EU) from June 1 to July 9.

Later this week, key economic indicators will be released in succession. The Personal Consumption Expenditures (PCE) Price Index for April, the inflation gauge most closely watched by the Fed, will be published on May 30. The preliminary estimate of U.S. gross domestic product (GDP) growth for the first quarter of this year will be released a day earlier, on May 29. The United States releases GDP growth rates in three stages?advance, preliminary, and final estimates. The preliminary figure is expected to match the advance estimate, showing a quarter-on-quarter annualized rate of -0.3%. Weekly initial jobless claims will also be announced on May 29.

U.S. Treasury yields are once again on the rise. The yield on the U.S. 10-year Treasury note, the global benchmark for bond yields, climbed 4 basis points (1 bp = 0.01 percentage point) from the previous day to 4.47%. The yield on the 2-year Treasury note, which is sensitive to monetary policy, rose 4 basis points from the prior session to 3.99%.