[Good Morning Stock Market] US Stocks Fall Despite Biden Stimulus... "Sector-Specific Strategies Effective Domestically"

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] The U.S. New York stock market closed slightly lower despite expectations for stimulus measures from the Joe Biden administration. On the 14th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 68.95 points (0.22%) from the previous session to close at 30,991.52. The Standard & Poor's (S&P) 500 index also dropped 14.30 points (0.38%) to 3,795.54, and the tech-heavy Nasdaq index ended the day down 16.31 points (0.12%) at 13,112.64.

On this day, the market was interpreted as being significantly affected by the burden of rising interest rates despite expectations for stimulus measures from the Biden administration. It is analyzed that the increase in yields on the recent 10-year U.S. Treasury bonds suppressed the indices. Domestic experts advise focusing on the market direction and sectoral benefits according to the U.S. economic stimulus measures.

◆Dae-hoon Han, SK Securities Researcher=Next week marks the official start of the Biden era. Ahead of his inauguration, Biden is known to be planning to announce a stimulus package. As the first step is always important, attention should be paid to which policy the next Biden administration will introduce first after taking office. The same was true during Trump's administration. When the repeal of Obamacare was signed as Executive Order No. 1 and concerns materialized, the healthcare sector showed underperformance compared to the market.

In the Biden administration, rejoining the Paris Climate Agreement, restoring relations with allied countries, responding to COVID-19, and repealing anti-immigration policies are mentioned as candidates for Executive Order No. 1. If Biden signs to rejoin the Paris Climate Agreement, interest in eco-friendly related stocks will continue; if he signs for COVID-19 response, expectations for economic activity resumption will rise; if he signs to restore relations with allied countries, foreign interest in the domestic stock market may be rekindled. The stock market direction is expected to show clear differentiation by sector depending on the scale and details of the stimulus package and the first executive order signed by the Biden administration. Attention should be paid to eco-friendly sectors, financial stocks affected by rising interest rates, infrastructure-related sectors expected to benefit from expanded infrastructure investment, and cyclical sectors depending on the size of the stimulus package.

◆Sang-young Seo, Kiwoom Securities Researcher=The Korean stock market is expected to start slightly higher. The previous day's market turned upward due to stable supply and demand from financial investments amid the influence of options expiration day. Meanwhile, the Philadelphia Semiconductor Index rose 2.13% in the U.S. market, Delta Air Lines mentioned the possibility of recovery in the second half of this year, and the Russell 2000 index rose 2.05% based on the Biden administration's stimulus package, which is expected to have a positive impact on investor sentiment. In the U.S. market, rotation from growth stocks to value stocks and from large-cap to small-cap stocks is spreading based on economic recovery and abundant liquidity. Considering this, the Korean stock market is also expected to fluctuate according to changes in individual stocks rather than the index.