[Good Morning Stock Market] US Stock Market Ends Mixed... KOSPI Expected to Start Lower

The office of the international credit rating agency Standard & Poor's (S&P) in New York. (EPA=Yonhap News)

The world's top three credit rating agencies, Standard & Poor's (S&P), downgraded the credit ratings of some U.S. banks, leading to mixed closing on the U.S. stock market last night. On the 23rd, the KOSPI is expected to start slightly lower.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,288.83, down 174.86 points (0.51%) from the previous session. The S&P 500 index fell 12.22 points (0.28%) to 4,387.55, while the Nasdaq index rose 8.28 points (0.06%) to 13,505.87.

The U.S. stock market showed gains in early trading but closed mixed due to negative factors such as the downgrade of U.S. banks' credit ratings, rising 2-year Treasury yields, and weakness in semiconductor and other tech stocks.

On this day, the 10-year Treasury yield closed at 4.32%, and the 30-year Treasury yield also ended at around 4.41%, showing a decline in long-term bonds. However, the 2-year Treasury yield rose above 5% during the session. Market experts point out that a short-term rise in Treasury yields could put additional downward pressure on the stock market. There are particular concerns that Federal Reserve Chair Jerome Powell's hawkish remarks may come during his Jackson Hole speech scheduled later this week.

The Philadelphia Semiconductor Index also closed down 0.93%. Nvidia, ahead of its earnings announcement, fell 2.77% due to a correction following recent gains.

Following S&P's downgrade of some U.S. banks, related stocks also declined. The banks downgraded are: Society Bankcorp, Valley National Bancorp, UMB Financial Corp, Comerica Bank, and KeyCorp. S&P explained the downgrade was due to deteriorating soundness of these banks caused by declining deposit balances, relatively high proportions of commercial and uninsured deposits, and increased capital raising costs due to rising interest rates. The downgraded banks all saw their stock prices fall.

The KOSPI is expected to start down about 0.3% today. Seo Sang-young, Head of Media Content at Mirae Asset Securities, said, "The U.S. stock market's surrender of gains or shift to decline, mainly in sectors affected by some negative factors, is a burden on the Korean stock market," adding, "Especially the selling pressure centered on the semiconductor sector is a factor dampening investor sentiment." He continued, "The strengthening of the dollar and yen, along with rising gold prices, indicates an expanded preference for safe-haven assets, which is also a burden," and added, "Considering this, the Korean stock market is expected to start down about 0.3%, then proceed through a process of digesting selling pressure while awaiting Nvidia's earnings and the Jackson Hole conference."