New York Stock Market Endures Rate Spikes with AI and Policy Support

Major tech stocks including SpaceX, SK Hynix, and Google all plunged, exacerbating the decline in small and medium-sized stocks.

Consequently, small and medium-sized stocks experienced a sharp decline, and major tech stocks such as SpaceX, SK Hynix, and Google also suffered significant drops.

On Thursday, the New York stock market began to rebound following positive interpretations of the outcomes of major world leader summits.

In particular, AI-related tech stocks led the rally, with Meta surging 4.5%, and a rebound in financial stocks also helped absorb the shock from rising interest rates.

Williams, President of the New York Federal Reserve, stated that further interest rate hikes by the end of the year seem reasonable, strengthening the Fed's hawkish stance.

Tom Barkin, Federal Reserve President, expressed concerns about persistent inflation and hinted at further action, with the market pricing in two rate hikes by year-end.

Concurrently, it expressed concerns about record-high debt, citing past events such as the SVB crisis, the 2008 financial crisis, and the Southern European financial crisis, raising the possibility of a historical financial crisis.

Last Wednesday, Iran proposed opening the Strait of Hormuz within 7 days if the U.S. accepted certain conditions.

However, President Trump rejected the proposal, deeming Iran's conditions insufficient, but left open the possibility of further negotiations.

The U.S. Department of Energy is exploring alternatives, fearing that a diesel export ban would lead to a balloon effect of rising gasoline prices.

Consequently, the Department of Energy is discussing a request for refiners to voluntarily reduce diesel exports, and Goldman Sachs has raised its oil price forecast.

With APEC (Asia-Pacific Economic Cooperation) meetings scheduled in China and G20 meetings in the US later this year, it is expected that the two countries will hold additional meetings to exclude mutually detrimental items and identify red lines.

'Taco' signifies the market's strong belief in President Trump's policy drive, suggesting investors still expect his influence.

'Muse' refers to the performance boost of tech stocks based on artificial intelligence (AI) capabilities, with AI-related companies, particularly Meta, playing a significant role in the stock market's ascent.

AI infrastructure investment is currently at an all-time high, surpassing past infrastructure investments during the railway or telecom eras in terms of GDP proportion.

Goldman Sachs forecasts that the AI CAPEX (capital expenditure) of the top five US hyperscalers will reach $1.2 trillion, with AI CAPEX projected to increase by 54% year-over-year next year.

Bill Gates warned about the risks of artificial intelligence (AI) and urged stronger regulation, expressing concerns about AI safety, including recent OpenAI hacking incidents.

Key tech executives, including Sam Altman, raised the need for government intervention, stating that individual company efforts alone are insufficient to address AI regulation.

Consequently, the three frontier companies, including Google, agreed to establish an AI safety standards organization to develop common safety standards for AI.

This decision is likely to provide an opportunity for OpenAI to expand its market share in the AI market.

The equity risk premium (ERP), the additional return of stocks compared to bonds, fell to zero, increasing fears of a potential sharp decline after Nasdaq's all-time high.

With the expected return of stocks relative to bonds hitting bottom, their relative investment appeal significantly diminished.

This indicates that despite Nasdaq reaching an all-time high, there is fear in the market about a potential sharp decline.

Solidigm's IPO has been a factor in SK Hynix's stock price adjustments, and this report has made the IPO plan more concrete.

Wall Street named Meta as a leader in AI agents, focusing on the potential impact of its free release on the market.

Wall Street highly rates Meta as a leader in the AI agent market and is focusing on the potential impact of Meta's free release of its AI agent on the market.

Concerns were raised about payment delays as the 2028 opening became uncertain, but Oracle explained that the project is proceeding as planned and that such situations are common.

The Wall Street Journal amplified the issue by questioning whether the contract included a non-cancellation clause.

Tesla also aims to produce 1,000 Optimus robots per week.

SpaceX conducted its 14th Starship launch, continuing its space experiments with Google data centers, and interest in the space industry as a whole, including exclusive space data contracts, is growing.