Why Did the New York Stock Market Rebound Despite the Fed's Hawkish Stance?

As of the morning of May 21 in Korea (May 20 Eastern Time), New York markets rose for the first time in four days. The S&P 500 climbed 1.1% to 7,432.97, the Dow rose 1.3% to 50,009.35, and the Nasdaq gained 1.5%. The decisive catalyst was the drop in the 10-year U.S. Treasury yield from 4.67% to 4.57%, which eased pressure on equities.

The day’s biggest macro event was the release of the minutes from the April FOMC meeting. A majority of Fed officials signaled that if inflation remains high, further rate hikes may be necessary, clearly tempering market hopes for an early rate cut. Yet yields actually fell, reflecting relief that much of the Fed’s hawkish stance had already been priced in and that there was no immediate signal to resume tightening.

On the corporate front, AI bellwether Nvidia dominated investor attention. During regular trading, it led the rebound with over a 1% gain on strong earnings expectations. Its after-hours report delivered an “earnings surprise,” beating consensus on revenue, profit, and next-quarter guidance. Even after announcing a sizable share buyback and increased dividends, its stock traded flat in extended hours, underscoring investors’ view that while AI momentum remains strong, expectations are now extremely high.

Global developments also supported sentiment. President Trump’s comment that negotiations with Iran were in their final stages sent Brent and WTI crude prices plunging about 6% in one day, easing energy-driven inflation concerns. However, with the Strait of Hormuz still blocked and the Iran conflict unresolved, volatility in oil and gold prices remains significant and will continue to be a direct variable in the Fed’s future policy path.

In sum, today’s New York market rally was driven by three interrelated pillars: the Fed’s hawkish minutes, a sharp drop in oil prices on eased Iran risk, and Nvidia’s strong earnings. Investors should keep in mind that interest rates, oil, and AI will remain key variables shaping the U.S. equity market’s direction going forward.