Chips are adding fuel to the fire. What's next for the market?
The biggest news in the market today is that the U.S. has authorized chip design companies to continue providing technology to China. What's the positive aspect of this?
It suggests that China and the U.S. may have engaged in in-depth communication and negotiations. Considering the upcoming 90-day tariff extension deadline under Trump, this move could pave the way for future tariff negotiations. We know Europe has already accepted a 10% general goods tariff scheme, and yesterday Vietnam also accepted a 20% export tariff while offering zero tariffs on U.S. goods. This immediately ignited the U.S. stock market.
The "Beautiful America" plan also mentioned chips, offering a 35% tax credit for building factories in the U.S., up from the previous 25%. Driven by these two major pieces of news, tech stocks surged collectively, with TSMC hitting a record high, up 4%. Micron Technology, which was initially down, rebounded sharply.
Today’s news about chip design technology authorization added more fuel to the fire for the chip sector. If this can be negotiated, then Nvidia’s chips could also be on the table, right?
As long as Nvidia’s chips are negotiable, this tech rally will be hard to extinguish.
From an objective standpoint, the small non-farm payroll data showed some anomalies, and today’s major non-farm payroll report will need to be watched. However, these concerns are likely to be overshadowed by retail investors’ enthusiasm in the face of such positive news.
From a portfolio perspective, it’s still important to allocate funds wisely and keep some cash on hand to exit quickly if the market turns. The U.S. stock market has been rising for three months. If it continues for another month, that would make it four months. Even in non-bearish conditions, the U.S. market typically experiences corrections, so I believe it’s crucial to remain cautious.
The key question is whether Nvidia will see a pullback after breaking through the $4 trillion mark.
That said, I don’t think any correction will be too severe, as macro-wise, the major U.S. indices haven’t risen much this year, and several giants like Apple and Tesla are still at relatively low levels. So, I believe the indices are unlikely to drop significantly, but stock performance will diverge sharply. Many companies in the S&P 500 have already undergone adjustments.
Therefore, I think the momentum remains strong, but caution is still needed due to the rapid shifts in market trends. A well-planned strategy is advisable.
2025 is bound to be a volatile year, requiring full digestion of the gains from the past two years. This demands higher personal discipline, so everyone should plan their portfolio management carefully. Those who can maintain strict discipline may consider joining our community.
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