[Good Morning Stock Market] Concerns Over Poor Earnings... "KOSPI Expected to Start Lower"

US Stock Market Weakens Mainly in Tech Stocks Due to Rising Treasury Yields
Domestic Market Expected to Continue Box Range Fluctuations

The US stock market fell across the board the previous day. This was due to concerns that corporate earnings would be weak, leading to profit-taking selling.

On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,394.25, down 37.83 points (0.12%) from the previous session. The Standard & Poor's (S&P) 500 index fell 6.26 points (0.16%) to 3,971.27, and the Nasdaq index closed at 11,716.08, down 52.76 points (0.45%) from the previous session.

[Image source=Yonhap News]

Looking at individual stocks, those that had risen significantly over the past month declined. Large tech stocks such as AMD (-2.12%), Alphabet (-1.4%), MS (-0.42%), and Apple (-0.4%) showed weakness. Tesla also dropped more than 1%, as the US regulatory authorities announced a preliminary investigation into the seat belts of the Model X vehicle, which appears to have negatively affected investor sentiment.

Investors are shifting their focus to Treasury yield movements and the Federal Reserve's (Fed) potential for further rate hikes as concerns over the banking sector ease. US Treasury yields have been rising again as the banking crisis subsides. Yields move inversely to prices. The 10-year Treasury yield rose to around 3.56%, and the 2-year Treasury yield surpassed 4%.

Sangyoung Seo, a researcher at Mirae Asset Securities, said, "While the desire for profit-taking has increased in the US stock market, the weakness in semiconductors and large tech stocks, which had driven the recent rise, is a burden on the Korean stock market. However, expectations for won appreciation due to dollar weakness, increased downward pressure on inflation due to slowing US housing rents, and expectations for the Fed to end its rate hike cycle could have a positive effect."

Jiyoung Han, a researcher at Kiwoom Securities, analyzed, "From an industry perspective, Micron Technology (-0.9%), which reported earnings after the market close, despite disappointing quarterly results (sales of $3.69 billion versus consensus of $3.73 billion), provided favorable guidance and a positive supply-demand outlook, leading to a firm level in after-hours trading. This is expected to have a neutral or better impact on domestic semiconductor stocks."

She added, "Given that foreigners have been net sellers on 10 out of 19 trading days since March, recording net sales of about 700 billion won in March alone, it is important to watch whether foreigners will support the index's downside by switching to net buying due to easing concerns over US banks and a falling exchange rate."