10/16 U.S. stocks rebound after Fed director Myron’s comments and U.S.-China concerns digest sales

The U.S. stock market opened higher on the back of the strong earnings report of financial stocks despite the U.S.-China friction. Treasury Secretary Bessent’s moderate remarks against China are also positive. However, after Fed Director Steve Myron’s remarks, the interest rate hike and the stock market’s opening of the sale are expected to rise. This is believed to have served as an excuse for the opening of the sale due to the anxiety over the U.S.-China conflict and the option expiration date. However, as semiconductor companies remained solid, reflecting expectations for the AI industry through remarks by Fed Director Waller, etc., they ended up in a mixed mood (-0.04 percent, Nasdaq +0.66 percent, S&P 500 +0.40 percent, Russell 2000 +0.97 percent, Philadelphia Semiconductor Index +2.99 percent)

*Variants: Myron, Bessent, Waller Remarks, Beige Book Announced

Fed board member Steve Myron suggests the need for a rate cut, arguing that the current monetary policy is tighter than general perception because neutral interest rates have fallen. However, while noting that AI investment could raise neutral rates, he stressed the need for a cautious approach by saying that his differences with members are in the “speed” of the cut and that he does not see a need for a significant cut of more than 50 basis points. On prices, he is optimistic about “housing cost down expectations,” but insists it should be reevaluated if the data is hotter than expected. While he dismissed the inflation-inducing effect of tariffs as having no evidence, he warned that the U.S.-China conflict is a serious problem and that if the threat materializes, there are significant downside risks and risk factors for the economic outlook have changed compared to a week ago. After related remarks, the market reacted sensitively, with interest rates on government bonds rising and the stock market shifting downward.

Meanwhile, Treasury Secretary Bessent said that regardless of the Supreme Court ruling, the Trump administration could switch to another tariff authority, indicating that the willingness to impose tariffs will continue. Meanwhile, he is optimistic that the tariff disagreement with South Korea will be resolved within the next 10 days. Regarding the friction situation with China, it was announced that the U.S.-China conflict will not expand as the trust relationship between the two leaders remains strong, and the summit will proceed as scheduled. Regarding AI, it defines the present as an early stage, not a bubble, and mentions expectations for the spread of related industries. On top of that, it announced that it will implement active industrial policies, such as setting a minimum price for strategic industries. This can be interpreted as a measure to protect U.S. companies in competition with China

Waller, the Fed’s director, analyzes AI innovation from the perspective of “creative destruction” and argues that he is optimistic that the benefits of improving productivity and improving living standards will be overwhelming in the long run. In addition, he explained that the rapid pace of change in AI is because it accelerates the historical pattern of professional to non-professional movement. He argued that short-term employment decline (management, support) is only a temporary phenomenon in the early stages of technology introduction, and that it will lead to economic growth and job creation in the long run. In particular, AI is expected to bring about sustained productivity growth of more than 2%, increasing real income without inflation, and improving the value of quality of life that is not measured in GDP. As for the policy direction, risks such as fraud and bias should be managed, but he emphasized that innovation should be allowed and risks should be mitigated based on traditional American experiments and market dynamics instead of European pre-regulation

Meanwhile, the Fed reported in its Beige Book that economic activity has recently changed little and consumer spending has declined slightly, with consumer polarization. Manufacturing has reported that overall activity has contracted due to weak tariffs and demand. In the job market, the level is stable, but uncertainty remains high, with demand slowing, and labor cost pressures are intensifying due to a surge in employer-funded health insurance premiums. Meanwhile, prices continued to rise, mainly due to increased costs of imports, insurance and services such as health care. On top of that, some industries said they were not passing on to consumers to protect market share, although the increase in input costs due to tariffs was reported. In general, it is in the same vein as Fed Chairman Powell’s remarks the previous day, indicating that both employment and inflation are increasing risks. However, the market impact is limited.

*Featured stocks: Semiconductors, nuclear power bullish Vs. regional banks, quantum computers slump

Semiconductors: Nvidia Slump Vs. AMD Soars
Nvidia (-0.11%) started higher due to HSBC raising its investment opinion, raising its target price for Mizuho, Oracle’s announcement of plans to build an AI ecosystem, and Fed Director Waller’s remarks on the AI industry. However, in the absence of a clear downward factor, the market continues to hold sales, reflecting intensifying competition. AMD (+9.40 percent) rose as many investment companies raised their investment opinions or target prices, with HSBC raising its target price from 185 dollars to 3210 dollars. In particular, as Oracle announced plans to build an AI ecosystem, the increase was reflected in the recent announcement of partnership between Oracle and AMD to build AI super clusters. Broadcom (+2.09%) also rose.

Semiconductors: Psychology More Sensitive to Good Things
ASML (+2.71%) rises on positive outlook for 2026 despite weak sales. Of course, despite mentioning concerns over slowing sales in China, the market has continued to rise recently on the basis of being more sensitive to favorable materials. On related news, most semiconductor companies, including Intel (+4.27%) who released AI chipsets, as well as Micron (+2.61%), TSMC (+2.96%), Ram Research (+4.68%), and AMAT (+4.30%), rose. In addition, other equipment and parts companies such as Western Digital (+6.46%), Seagate (+3.66%) and Arista Network (+3.31%) continued to rise. The Philadelphia Semiconductor Index rose 2.99%.

Cars: Tesla Rises Amid Positive Outlook Ahead Of Earnings Release
Tesla (+1.38%) rose amid positive outlook ahead of earnings announcement. The market is forecasting 55 cents per share, lower than 72 cents in the third quarter of last year, but it is expected to be better than expected based on increased sales ahead of the end of the third quarter tax credit. Meanwhile, the market is focusing on the fourth quarter sales forecast during this earnings call. Quantum Skape (+5.75%) is also expected to be 3