US Stock Market Close: Three Major Indices Close Lower Collectively, Trump Responds to "TACO" Deal

On Wednesday, Eastern Time, the three major US stock indices weakened in late trading and closed collectively lower as investors digested the minutes of the US Fed meeting and awaited the earnings report of Nvidia, a leader in artificial intelligence.

The meeting minutes released by the US Fed during the trading session showed that officials believed they might face a "difficult trade-off" in the coming months, with both inflation and unemployment rising, and that heightened economic uncertainty justified a cautious monetary policy.

Peter Cardillo, chief market economist at Spartan Capital, commented that the market was stagnant today, and the Fed's meeting minutes did not reveal anything new. They basically indicated that the Fed was in a wait-and-see mode, trying to learn more about the impact of trade policies.

Notably, Trump defended the popular "TACO" trade in the market on Wednesday. Trump was angered by this narrative, calling it the most annoying issue, and said his repeated retreats were part of a trade compromise strategy. "This is called negotiation," Trump said. As part of the negotiation, he intentionally set an outrageously high number and then slightly lowered it.

TACO stands for Trump Always Chickens Out. In this trade, investors buy the dip after Trump issues tariff threats, and the stock market will rebound when he eventually softens his tone.

The positive impact of easing US-European trade tensions is fading, and investors' focus has shifted to Nvidia's earnings report, a major event for the global financial market.

Investors have high hopes for the leading company riding the wave of the artificial intelligence technology boom. However, there are also concerns that Nvidia's stock price may have risen too high, despite its basically stagnant performance this year.

In the bond market, the yield on 10-year US Treasuries rose to 4.47% from 4.43% at the end of trading on Tuesday. US Treasury yields were volatile last week, unsettling global markets, partly due to concerns about the rapid rise in the US government's debt levels. This volatility also affected Japan, with a poor performance in the auction of 40-year Japanese government bonds on Wednesday.

The latest US Fed meeting minutes showed that some rate-setters noted the decline in the prices of US Treasuries, stocks, and the US dollar in the weeks after Trump announced sweeping tariffs on trading partners. "These participants pointed out that the continued shift in these correlations, or the weakening of the status of US assets as a safe haven, could have long-term implications for the economy," the minutes said.

Market Dynamics

At the close, the Dow Jones Industrial Average fell 244.95 points, or 0.58%, to 42,098.70; the Nasdaq Composite dropped 98.23 points, or 0.51%, to 19,100.94; and the S&P 500 index declined 32.99 points, or 0.56%, to 5,888.55.

Among the 11 sectors of the S&P 500, the consumer discretionary sector fell by 0.94%, the information technology/technology sector declined by 0.34%, the energy sector dropped by 1.25%, and the financial sector decreased by 0.7%.

Performance of Popular Stocks

Most large-cap tech stocks closed lower, with Tesla down 1.65%, Microsoft down 0.72%, Amazon down 0.63%, Nvidia down 0.51%, Alphabet Class A down 0.31%, Apple up 0.1%, and Meta up 0.23%.

Shares of Joby Aviation, a US electric air taxi company, surged nearly 29% after it received its first strategic investment worth $250 million from Toyota Motor Corporation.

Synopsys fell nearly 10%, and Cadence dropped 10.67% following reports that the US Department of Commerce would introduce new policies targeting semiconductor software designers.

Most popular Chinese ADRs closed lower, with the Nasdaq Golden Dragon China Index down 0.71%. Niu Technologies rose over 3%, while Alibaba and JD.com fell over 2%, and iQIYI dropped over 4%.

Company News

[Apple Reportedly Plans to Overhaul OS Naming Convention, Using Years Instead of Version Numbers]

Apple Inc. plans to make its most comprehensive adjustment to the naming of its operating systems yet, as part of a software overhaul that will extend to all its devices. According to people familiar with the matter, Apple's next-generation operating systems will be named after years rather than version numbers. Anonymous sources indicated that this means the current iOS 18 will give way to "iOS 26". Other system updates will also be called iPadOS 26, macOS 26, watchOS 26, tvOS 26, and visionOS 26, respectively. Apple's move aims to achieve branding consistency and move away from current practices that may confuse users and developers. Today's operating systems—including iOS 18, watchOS 12, macOS 15, and visionOS 2—use different version numbers, so their initial releases are not simultaneous.

[OpenAI Executive: Restructuring Paves the Way for IPO, Decision Depends on Market and Company Development]

Sarah Friar, the Chief Financial Officer of OpenAI, said on Wednesday that the company's restructuring plan lays the groundwork for a potential future initial public offering (IPO), but whether to proceed with an IPO will depend on the conditions of the public market and the company's own readiness. "The structure of a public benefit corporation positions us for an IPO...if we want to and are ready," she said.

[ExxonMobil CEO: Company Will Stick to Investment Plans Even if Oil Prices Fall to $50]

Darren Woods, the CEO of ExxonMobil, stated that the company will maintain its capital allocation plans unchanged even if oil prices fall to $50 per barrel. Woods said that at the end of last year, the Texas oil giant conducted stress tests on its business under "more punishing conditions" than the current environment and presented the results to the board. The outcome was that even if oil prices fall from the current $65 per barrel, the company will continue to invest in new projects and return cash to shareholders. Despite the company's flexibility, Woods said, "We don't see a need to make changes even if oil prices drop as low as $50 per barrel." "To achieve differentiated long-term value, we must invest in profitable growth and favorable investment opportunities," he added.

[Nvidia's net profit in the first fiscal quarter was $18.78 billion, up 26% YoY]

Nvidia's revenue in the first fiscal quarter was $44.1 billion, up 69% YoY, exceeding market expectations of $43.29 billion. Data center revenue in the first fiscal quarter was $39.1 billion, up 73% YoY, exceeding the estimate of $39.22 billion. Net profit in the first fiscal quarter was $18.78 billion, up 26% YoY. Nvidia expects revenue in the second fiscal quarter to be around $45 billion, with a 2% fluctuation, while analysts expect $45.5 billion.