A Mixed Baggage on Wall Street: Post-Trump's Saudi Arabia Visit, US Stock Markets on Edge
Time for a breather:
Artificial Intelligence Stocks Surge Post-Saudi Visit by Trump
After a stretch of partly strong gains, Wall Street took a break in the midweek. The Dow Jones Index closed 0.2% lower, standing at 42,051 points. The S&P-500 and the Nasdaq Composite inched up by 0.1% and 0.7%, respectively.
Trade Tensions Reignite:
The trade dispute between the US and China continues to dominate conversations, although there are signs of relaxation since the weekend. Yet, concrete negotiations regarding the future tariffs still seem to be on hold. The pressing clock, as the originally high tariffs will resume application after 90 days, is a concern.
KI-related Stocks on the Rise:
Saudi Arabia announced investments worth $20 billion in US-based KI data centers and energy infrastructure. This announcement led to a surge in shares of Nvidia (+4.2%), AMD (+4.7%), Super Micro Computer (15.7%), and AMD, with the latter also announcing a share buyback program.
An Anticlimactic Recording from Apple:
Foxconn, a key player in assembling Apple's iPhones, reported a sharp increase in profits in Q1 but reduced its sales forecast due to tariff risks. Despite this, the Apple stock slightly weakened.
A Towering Order for Boeing and GE Aerospace:
Qatar Airways placed orders worth $96 billion for aircraft and engines from Boeing and GE Aerospace. This order positively impacted the stocks of these companies.
American Eagle Outfitters: A Disappointing First Quarter:
American Eagle Outfitters posted disappointing results for Q1 and withdrew its guidance for the 2025 fiscal year. In response, the stock dropped by 6.5%.
The Gold Standard:
Oil prices receded after strong gains, with Brent and WTI futures losing up to 1.3%. This decrease was attributed to an unexpected rise in US oil inventories. The gold price also saw a significant drop of 2.1% due to decreased demand for safe havens.
The Dollar's Dilemma:
The US dollar stabilized after its recent downturn, but remains under pressure, according to analysts. This pressure persists due to US President Donald Trump's repeated calls for rate cuts, following the release of disappointing US inflation data. Oil's decline after the data appears to be a result of Trump's satisfaction with the lack of tariff impact.
Uncertainty Amidst Optimism:
While the market has showcased resilience, rallying after significant policy announcements like the pause on tariffs, macro policy uncertainty remains. Despite this, investors have grown accustomed to the ease in the trade backdrop.
The Road Ahead for US Stocks:
The US stock market is viewed as trading at a discount, with a 8% undervaluation[2]. Despite recent volatility, Morgan Stanley forecasts that 2025 may be a "pause" year for equities, suggesting potential single-digit gains for the S&P 500[3]. Companies like Nvidia, AMD, and Apple are expected to perform well or benefit from these developments.
[1] ntv.de, ino/rts
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- Despite the current macro policy uncertainty, some EC countries might find investing in companies like Nvidia, AMD, and Apple attractive, given their potential gains as predicted by Morgan Stanley for the year 2025.
- The positive stock market performance of companies operating in the employment policy sector, such as data centers and energy infrastructure, could potentially attract financing from various sources, including stock-market investors.
