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(New York=Yonhap Infomax) Jin Woo Choi — All three major U.S. stock indices closed higher, buoyed by dovish remarks from John Williams, President of the Federal Reserve Bank of New York, which fueled expectations for a policy rate cut by the Federal Reserve (Fed) and boosted risk appetite across markets.
Investor sentiment was further lifted by reports that the Trump administration is considering easing export controls to allow Nvidia Corp. to sell certain graphics processing units (GPUs) to China. This dual support from both the central bank and the administration was likened to a 'put'—a market backstop akin to a put option.
On November 21 (U.S. Eastern Time), the Dow Jones Industrial Average rose 493.15 points, or 1.08%, to close at 46,245.41. The S&P 500 gained 64.23 points, or 0.98%, to finish at 6,602.99, while the Nasdaq Composite advanced 195.03 points, or 0.88%, ending at 22,273.08.
Wall Street was driven higher by Williams' comments. Speaking at the Central Bank of Chile's centennial conference in Santiago, Williams stated, "I still see the possibility of further adjustments to the federal funds rate (FFR) target range in the near term to bring policy closer to neutral."
As Vice Chair of the Federal Open Market Committee (FOMC), Williams holds a permanent voting seat. John Velis, macro strategist at BNY Mellon, noted, "Williams is generally seen as aligned with Chair Jerome Powell. If Williams is open to near-term rate cuts, markets will expect Powell to share that view."
According to CME FedWatch, as of 16:11 in New York, the FFR futures market priced in a 71.5% probability of a 25 basis point rate cut by the Fed in December, up sharply from 39.1% the previous day—a jump of over 30 percentage points.
Louis Navellier, Chief Investment Officer at Navellier & Associates, commented, "It may be premature to call this the bottom of the correction, but if the anticipated December rate cut materializes, equities could see a notable rebound that month."
All three major indices extended gains of over 1% around midday, propelled by rate cut hopes.
Momentum accelerated following reports that the Trump administration is reviewing the removal of export controls on certain Nvidia GPUs. Bloomberg reported that the administration is internally considering allowing sales of Nvidia's H200 GPU to China. Since 2022, the U.S. has imposed export restrictions on advanced GPUs, but the latest news suggests a potential easing for select products.
Shares of Nvidia and other artificial intelligence (AI)-related stocks surged on the news. The Philadelphia Semiconductor Index, which tracks AI and semiconductor stocks, climbed as much as 2.42% intraday.
However, concerns over an AI bubble persist. Ben Inker, co-head of asset allocation at GMO, said, "AI stocks are priced extremely high and show clear speculative behavior, which looks like a classic bubble. Investors are uneasy about a potential bubble, but lacking certainty, they seem to accept current market prices as the new normal."
Reflecting these concerns, the Nasdaq gave back more than half of its intraday gains by the close.
All sectors advanced, led by communications (2.15%), healthcare (2.11%), materials (2.10%), consumer staples (1.74%), real estate (1.30%), industrials (1.20%), and financials (1.09%). Utilities posted the smallest gain at 0.01%.
The so-called Magnificent 7 tech giants saw mixed results. Nvidia, the AI bellwether, rebounded from an intraday plunge of 4.27% to close down just 0.97%. Alphabet (Class A) jumped 3.56%, while Amazon (1.63%), Apple (1.97%), and Meta Platforms (0.87%) also gained. In contrast, Tesla fell 1.05% and Microsoft dropped 1.32%.
Semiconductor stocks were broadly higher, with Micron Technology up 2.98%, Qualcomm up 2.32%, and Intel up 2.62%. AMD, Nvidia's GPU rival, slipped 1.09%.
Apparel retailer Gap soared 8.24% after quarterly earnings beat market expectations.
The CBOE Volatility Index (VIX) plunged 2.99 points, or 11.32%, to 23.43.
jwchoi@yna.co.kr
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