[New York Stock Exchange] AI and Semiconductors Rebound... Broad Gains on Hopes for 'Trump Tariff' Removal

AI and Semiconductor Stocks Lead New York Market Rebound
Gains Trimmed by Late Profit-Taking
Skepticism Detected in Supreme Court Tariff Hearing

The three major indices on the New York Stock Exchange all rebounded simultaneously. This was due to a growing perception that the recent plunge in technology stocks was excessive, which in turn attracted bargain hunters. Optimism that some tariffs might be withdrawn also contributed to the market's rise, as the U.S. Supreme Court expressed skepticism toward President Donald Trump's tariff policies. However, a wave of profit-taking in the final minutes of trading nearly halved the day's gains, highlighting persistent concerns about a potential bubble in technology stocks.

Reuters Yonhap News

On the 5th (local time), the Dow Jones Industrial Average, which is focused on blue-chip stocks, closed at 47,311, up 225.76 points (0.48%) from the previous session. The S&P 500 Index, which tracks large-cap stocks, rose by 24.74 points (0.37%) to 6,796.29, while the tech-heavy Nasdaq Index jumped 151.16 points (0.65%) to close at 23,499.80.

The market continued its rebound led by technology stocks. Alphabet rose 2.4%, Broadcom gained 2%, and Meta Platforms advanced 1.4%, fueling overall market optimism. Micron Technology climbed about 9%, recovering its previous day's losses, and Oracle, a leading artificial intelligence (AI) stock, also reversed its prior losses to close higher.

AMD opened lower but reversed course in the latter part of the session to finish up 2.5%. Although AMD reported third-quarter results that exceeded market expectations, concerns over a potential decline in profit margins weighed on its share price early in the session. Nvidia and Microsoft both recorded declines of over 1%.

In the last 15 minutes of trading, the major indices gave up about half of their gains, demonstrating that overvaluation and concerns over an AI bubble are still weighing on investor sentiment. The Nasdaq Index, which is heavily weighted toward technology stocks, was up as much as 1.23% during the session, but its gain narrowed to 0.64% just before the close.

AI-related stocks continued to exhibit significant volatility. Palantir fell by more than 1% after plunging 8% the previous day amid concerns that its valuation was excessively high. Super Micro Computer tumbled 11% after reporting results that fell short of expectations, and Arista Networks, a network equipment company, dropped about 9% due to disappointing earnings.

Phil Blancato, Chief Market Strategist at Osam Investment Management, commented, "The overall market gains are modest, and even within the AI sector, there are clear winners and losers," adding, "Because valuations are excessively high, investors should take a selective approach to AI stocks going forward."

Both private employment and services sector indicators released that day beat expectations, demonstrating the resilience of the U.S. economy. The Institute for Supply Management (ISM) reported that the Services PMI for October came in at 52.4, indicating expansion, while the ADP National Employment Report showed that private employment increased by 42,000 in October.

However, this strong economic data pushed up Treasury yields and weakened expectations for a third interest rate cut by the Federal Reserve in December. According to the CME FedWatch Tool, the probability that the federal funds rate will remain unchanged through December rose to 37.4% from 31.4% the previous day in the federal funds futures market.

Investors also focused on the U.S. Supreme Court's hearing regarding President Trump's tariff policies. During the hearing, even the conservative justices appeared skeptical about the president's use of authority under the International Emergency Economic Powers Act (IEEPA), prompting participants in prediction markets to reduce their bets on the continuation of Trump's tariffs. As a result, tariff-sensitive stocks such as Ford and General Motors (GM) each rose by more than 2%, while Caterpillar, a construction and mining equipment manufacturer, climbed nearly 4%.

Chief Market Strategist Blancato stated, "The debate over the effectiveness of tariffs is ongoing," and added, "The real impact will only become clear in the first quarter of next year." He further noted, "There is still a sense of disillusionment lingering in the market."