[Good Morning Stock Market] US Stock Rally Stalled by Powell... KOSPI Expected to Start Lower

The U.S. stock market fell due to hawkish remarks by Federal Reserve (Fed) Chair Jerome Powell, who left the possibility of further tightening open, leading the KOSPI to also start lower on the 10th.

[Image source=Reuters Yonhap News]

On the 9th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed down 220.33 points (0.65%) at 33,891.94. The large-cap S&P 500 index fell 35.43 points (0.81%) to 4,347.35, and the tech-heavy Nasdaq index dropped 128.97 points (0.94%) to 13,521.45.

Until the previous day, the S&P 500 and Nasdaq indices had risen for 8 and 9 consecutive trading days respectively, marking their longest streaks since November 2021. However, on this day, after showing mixed trends, demand for 30-year Treasury bonds weakened, turning the market downward, and Powell’s remarks further deepened the losses.

Chairman Powell stated, "The Federal Open Market Committee (FOMC) is committed to achieving a sufficiently restrictive monetary policy stance to bring inflation down to 2%," but added, "We cannot be certain that we have achieved such a policy stance." He emphasized, "If we judge that it is appropriate to shift monetary policy to a more restrictive stance, we will not hesitate to do so."

All 11 sectors of the S&P 500 declined. Notably, healthcare (-2.10%), consumer discretionary (-1.82%), real estate (-1.51%), and utilities (-1.38%) saw significant drops. Amylix Pharmaceuticals (-31.89%), Topgolf Callaway Brands (-16.87%), and Becton Dickinson (-9.25%) reported earnings below market expectations, causing their stock prices to fall, while Duolingo (21.37%), Affirm Holdings (14.25%), TransDigm Group (8.70%), and Walt Disney (6.91%) outperformed expectations and rose.

The Morgan Stanley Capital International (MSCI) Korea Index ETF and MSCI Emerging Markets Index ETF fell 0.99% and 0.94%, respectively. Eurex KOSPI 200 futures dropped 0.52%. As a result, the KOSPI is expected to open down by approximately 0.5% to 0.9%.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The net foreign buying, which had fallen to 4.767 trillion KRW cumulatively for the year at the end of last month, increased by about 2 trillion KRW to 6.775 trillion KRW." He added, "During the same period, the KOSPI rose 6.5% and the KOSDAQ 9.1%, but since the short-selling ban was implemented until the previous day, the KOSPI and KOSDAQ have fallen by 3.0% and 4.4%, respectively." He further noted, "Foreign investors continue to maintain a long position in semiconductors and a short position in secondary batteries, opposite to individual investors."