[New York Stock Exchange] Mixed Close Amid Resumption of US-China Trade Talks in London... S&P, Nasdaq Up

US and China Expected to Discuss Lifting Export Controls
Hassett: "US to Ease Export Restrictions...China to Release Rare Earths"
May CPI and PPI to Be Announced This Week

The three major indices of the New York Stock Exchange ended mixed in a narrow range on June 9 (local time). Cautious buying emerged amid expectations that tensions between the United States and China would ease, following the start of the second round of high-level trade talks between the two countries in London, UK. As a result, the S&P 500 and Nasdaq indices posted slight gains.

Reuters Yonhap News

On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 42,761.76, down 1.11 points (less than 0.1%) from the previous trading day. The S&P 500, which tracks large-cap stocks, rose 5.52 points (0.09%) to 6,005.88, while the tech-heavy Nasdaq advanced 61.28 points (0.31%) to finish at 19,591.24.

The United States and China resumed their second round of high-level trade talks in London on this day, following last month's meeting in Geneva, Switzerland. Previously, during the Geneva negotiations, both countries agreed to lower tariffs on each other by 115 percentage points. The London talks are expected to focus on the possible lifting of China's export controls on key minerals and rare earths to the US. In the first round of talks, China agreed to withdraw certain non-tariff measures, such as halting exports of rare earth minerals and permanent magnets to the US, but the US claimed that China did not fulfill the agreement. As a result, the leaders of the US and China held a direct phone conversation on June 5 to discuss the issue, which led to the launch of the second round of high-level trade talks on this day.

Kevin Hassett, Chairman of the White House National Economic Council (NEC), said in an interview with CNBC that the US would request China to resume exports of key minerals. He stated, "We expect that immediately after the US and China shake hands, US export restrictions will be eased and a large volume of rare earths will be released from China. After that, we can return to negotiations on smaller issues." He also explained that the US had recently restricted exports to China of aircraft engines, semiconductor design software, certain chemicals, and nuclear power plant equipment, and that the two sides would discuss lifting these export controls in connection with the resumption of Chinese exports of rare earths to the US.

On Wall Street, optimism is rising that the talks could ease tensions surrounding the US-China trade conflict. Larry Tentarelli, Chief Technical Strategist at Blue Chip Daily Trend Report, said, "Investors are buying Chinese large-cap stocks and US semiconductor stocks today. All of these are beneficiaries of the US-China trade talks."

However, there are also projections that market volatility will persist depending on the outcome of future trade negotiations. Richard Saperstein, Chief Investment Officer (CIO) at Treasury Partners, said, "The market rose on expectations of tariff delays and the application of less severe tariffs than initially announced. Trade negotiations take time, and unstable tariff news is likely to cause significant volatility."

This week, key inflation indicators will be released in succession. The Consumer Price Index (CPI) for May, due on June 11, is expected to have risen 2.5% year-on-year, up from a 2.3% increase in April. The Producer Price Index (PPI), known as "wholesale prices," will be released the following day on June 12. The May PPI is forecast to have increased by 0.2% from the previous month, marking a turnaround from the 0.5% decline in April. The PPI affects the CPI, or "retail prices," with a time lag. Investors are expected to use these figures to gauge the impact of President Trump's tariff policies on inflation. On June 13, the University of Michigan Consumer Sentiment Index and expected inflation will be announced.

Yields on US government bonds are declining. The yield on the 10-year US Treasury note, the global benchmark for bond yields, fell 3 basis points (1bp = 0.01 percentage point) from the previous session to 4.48%. The yield on the 2-year Treasury note, which is sensitive to monetary policy, also dropped 3 basis points to around 4.0%.

By sector, semiconductor stocks?considered beneficiaries of easing US-China trade tensions?rose. AMD surged 4.77%, and Texas Instruments (TI) jumped 3.53%. Nvidia climbed 0.64%. Qualcomm gained 4.13% on news that it would acquire semiconductor company Alphawave for $2.4 billion. Apple fell 1.21% after its annual developer event, WWDC. Although the company announced it would redesign the iPhone operating system for the first time since 2013, disappointment over the absence of the anticipated Siri upgrade scheduled for this year led to selling pressure. Chinese tech giant Alibaba rose 1.77%.