[Good Morning Stock Market] Sector Concentration Severe in US Market... "Korean Market Will Also Continue Stock-Specific Trends"

Samsung Electronics Conference Call in Focus... Attentive to Semiconductor Market Outlook

On the 4th (local time), pedestrians are passing in front of the New York Stock Exchange building in Manhattan, New York City, USA. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The U.S. stock market closed mixed amid intensified sector concentration. The domestic stock market is also expected to show differentiation among stock groups in a similar pattern. In particular, the index fluctuations are anticipated to be determined by the content of Samsung Electronics' conference call.

On the 27th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,490.69, down 0.74% from the previous day. The S&P 500 also fell 0.51% to 4,551.68 compared to the previous day. Only the tech-heavy Nasdaq index closed slightly up by 0.00% (0.12 points) at 15,235.84.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = In the U.S. stock market, while many stocks declined, volatility in related stocks expanded depending on individual companies' factors such as earnings announcements. The Nasdaq was lifted by strong earnings from Microsoft (MS) and Alphabet, Google's parent company. Tesla and Amazon also surged due to individual issues.

Meanwhile, concerns over uncertainty in the Democratic Party's agreement on the social spending bill led to selling pressure before the market close. During the day, House Speaker Nancy Pelosi and others announced that there would be no vote on the bill that day but it could happen next month. Senator Kyrsten Sinema also claimed progress after meeting with the White House, which had a positive impact, but the stock market was burdened as 40 progressive lawmakers opposed Sinema's remarks.

Overall, while most individual stock groups were sluggish, a concentration phenomenon occurred in stocks with some positive factors, causing sharp rises. Conversely, stock groups with negative factors saw selling pressure and larger declines. Attention should be paid to whether this differentiation will further expand. The upcoming U.S. third-quarter gross domestic product (GDP) growth rate announcement, next week's Federal Open Market Committee (FOMC) results, and the passage of the social spending bill in the U.S. Congress could increase volatility across the market.

The domestic stock market is also expected to continue showing stock differentiation. In particular, the conference call by Samsung Electronics held that day is expected to trigger sensitive reactions mainly in related stock groups depending on semiconductor market conditions and investment-related content. The sharp rise in the U.S. solar sector and the surge in Ford Motor Company's stock in after-hours trading following an upward revision of annual new car demand forecasts are also factors influencing individual stock markets. Although the Nasdaq showed strength, the Russell 2000 index fell 1.90%, indicating many declining stocks, which is likely to be a concern. Additionally, increased volatility in U.S. Treasury yields and concerns over slowing U.S. growth are expected to weigh on the indices.

◆ Jiyoung Han, Researcher at Kiwoom Securities = Recently, the rapidly expanding volatility in the U.S. and Korean bond markets is also affecting the stock markets. The U.S. 10-year Treasury yield rose to the 1.7% range last week but has quickly fallen back to the 1.5% range. Although this reflects a strong profit-taking nature, the recent weakness in the U.S. stock market is also believed to be influenced by the decline in yields. This is thought to be due to growing concerns over slowing growth ahead of the third-quarter GDP announcement.

The U.S. stock market is also experiencing intensified concentration based on individual earnings. This phenomenon often appears in periods where macroeconomic uncertainty and risk asset preference coexist. Moreover, market participants are currently placing a higher premium on earnings growth itself compared to the earnings seasons of the first and second quarters. Therefore, despite the recovery of momentum in the earnings season, a market showing divergent stock price movements among sectors and companies based on individual earnings results is expected in the short term.

The domestic stock market, which showed a downward trend due to profit-taking pressure the previous day, is also expected to exhibit a differentiated stock market based on individual earnings, with the index itself showing limited price movement on the day.