[US-China Summit] Wall Street Expects S&P 500 to Fluctuate 0.7% During Summit

Semiconductors, Rare Earths, and Agricultural Products on the Table

"Geopolitical and Inflation Concerns... Potential for Unexpected Shocks"

As U.S. stock markets continue to reach new record highs, Bloomberg News reported on the 13th (local time) that the upcoming U.S.-China summit could become a new test for markets.

On this day, the S&P 500 Index closed at 7,444.25, up 43.29 points (0.58%) from the previous session, marking an all-time high on the New York Stock Exchange.

U.S. President Donald Trump. Photo by AFP Yonhap News

Stocks are rising, particularly among companies whose chief executive officers (CEOs) are accompanying U.S. President Donald Trump on his visit to China. Nvidia's stock price rose 2.3% after CEO Jensen Huang joined the delegation at the last minute. Shares of Micron and Qualcomm climbed by 4.8% and 1.4%, respectively. Tesla was up 2.7%, while Boeing gained 1.6%.

Investor nerves ahead of the summit appear to be relatively calm. According to Piper Sandler, the S&P 500 Index is expected to fluctuate by about 0.7% each day over the two-day period from May 14 to 15. This is less than the expected volatility for Chinese internet stocks during the same period, or the projected movement of the S&P 500 following Nvidia’s earnings announcement next week.

Bloomberg noted that despite heightened geopolitical risks and growing concerns about inflation, the market continues to maintain an optimistic outlook. However, it warned that markets at all-time highs could be shaken significantly by unexpected negative developments.

Danny Kirsch, head of options at Piper Sandler, stated, "With call option volumes approaching record levels, any unfavorable developments regarding U.S.-China trade relations or renewed Middle East tensions surrounding Iran are likely to be viewed negatively by investors." He added that the emergence of new trade war threats could trigger a wave of selling.

Bloomberg identified sectors likely to be affected by the U.S.-China summit, including aerospace, agriculture and agricultural machinery, critical minerals, and semiconductors.

Previously, the outlet reported that China is considering a contract to purchase approximately 500 Boeing 737 MAX aircraft. Boeing CEO Kelly Ottburg accompanied the delegation on this visit to China. However, George Ferguson, an analyst at Bloomberg Intelligence, commented that while an announcement of Boeing orders is likely, any positive impact on Boeing’s earnings may take a considerable amount of time to materialize, or may not appear at all, despite a potential rebound in the stock price.

If China pledges to purchase U.S. agricultural products, this is expected to be favorable for American farmers. According to traders familiar with the matter, China is discussing the purchase of U.S. crops such as soybeans and corn. However, the risk of the deal falling through due to geopolitical tensions cannot be overlooked.

Oppenheimer analyst Kristin Owen noted that companies such as Deere, a tractor manufacturer, and Corteva, a seed company, could be affected. She stated, "If positive developments or outcomes from the summit lead to higher agricultural prices, it could help ease the burden on farmers. Conversely, if there is a negative shock, the pressure on farmers will increase, but the additional downside may be limited."

The Trump Administration acquired a stake in rare earth company MP Materials last year and has also invested in USA Rare Earth, Lithium Americas, and Trilogy Metals. Bill Peterson, an analyst at JP Morgan, noted that an agreement on rare earth supplies could pose a risk factor for MP Materials' stock price.

China’s access to advanced semiconductors is also expected to be a major agenda item at the summit. Josh Lipsky, senior director at the GeoEconomics Center of the Atlantic Council, predicted that the two countries could reach an agreement covering both rare earths and semiconductors. He expects the agreement to focus more on fulfilling previously promised product supplies rather than creating new deals, and that it may take time for investors to see any impact.

However, any progress—regardless of form—could provide further momentum for U.S. semiconductor stocks. Scott Ladner, chief investment officer (CIO) at Horizon Investments, said, "Nvidia is effectively assuming zero revenue from China in its earnings outlook. If this changes in a meaningful way, the overall demand outlook for the semiconductor industry could be significantly altered."

This content was produced with the assistance of AI translation services.