[New York Stock Market] Tariff Negotiation Extension, Rate Cut Expectations... S&P 500 Up 0.8%

U.S. Treasury Yields and Dollar Fall
on Reports of Early Fed Chair Nomination

On June 26 (local time), all three major U.S. stock indexes in New York closed higher, approaching record highs. The market gained strength due to expectations that the deadline for reciprocal tariffs under the Donald Trump administration would be extended, as well as forecasts that an interest rate cut could come sooner than previously anticipated.

On this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average closed at 43,386.84, up 404.41 points (0.94%) from the previous trading day. The large-cap S&P 500 index rose by 48.86 points (0.8%) to 6,141.02, while the tech-heavy Nasdaq index climbed 194.36 points (0.97%) to close at 21,67.91.

Reuters Yonhap News

By sector, big tech (large technology companies) and financial stocks led the market rally. Nvidia rose 0.46%, hitting a new all-time high. Meta gained 2.46%, Alphabet, the parent company of Google, rose 1.71%, and Amazon.com closed up 2.42%. JP Morgan Chase shares hit an intraday record high and finished up 1.65%, while Goldman Sachs advanced 2.58%. Energy company Shell gained 2.23% after denying media reports that it was in early talks to acquire BP.

With geopolitical risks easing, the White House's suggestion of an extension to the tariff negotiation deadline had a positive impact on market sentiment.

Stocks climbed to intraday highs after White House spokesperson Karoline Leavitt made remarks that alleviated market concerns about the July 8 reciprocal tariff negotiation deadline. She stated, "The deadline is not important," adding, "It may be extended. However, that is a decision for the President to make."

Geopolitical risks that had previously worried Wall Street eased as a ceasefire between Israel and Iran held. President Trump said the previous day that there was a high possibility of talks between the U.S. and Iran next week. Oil prices, which had surged on geopolitical risks, continued to decline, easing concerns about inflation.

Jeffrey Buchbinder, chief equity strategist at LPL Financial, said, "The market seems to be reflecting the best-case scenario for trade and geopolitical issues," adding, "Elevated stock valuations suggest that with restrained interest rates and oil prices, tariffs are also expected to be sufficiently absorbed by a growing economy."

Economic indicators released on this day also signaled to the market that the economy remains stable. The U.S. Department of Labor reported that new unemployment claims for the week of June 15-21 totaled 236,000, a decrease of 10,000 from the previous week. This figure is significantly lower than the Dow Jones expert consensus forecast of 244,000.

The early nomination of the next Federal Reserve (Fed) chair is also a focus of market attention. There were reports that President Trump could nominate a successor to Jerome Powell, whose term ends in June next year, ahead of schedule. With expectations for an early rate cut, Treasury yields fell on the day. The yield on the benchmark U.S. 10-year Treasury note stood at 4.25%, while the yield on the 2-year Treasury note, which is sensitive to monetary policy, hovered around 3.72%.

The U.S. dollar also weakened, hitting its lowest level in more than three years. The dollar index stood at 97.3 near the close of the New York session, down 0.4% from the previous day.

According to CME FedWatch, the federal funds rate futures market reflected a 20.7% probability of a rate cut in July and a 93.3% probability of a rate cut in September on this day.

Francesco Pesole, a strategist at ING, said, "Media reports that President Trump is considering nominating the next Fed chair ahead of schedule are reinforcing dovish bets."