[Good Morning Stock Market] US Stocks End Sharply Lower... "Limited Movement Expected for KOSPI"

Overnight, the U.S. stock market closed sharply lower as profit-taking selling pressure emerged due to concerns over high valuations. The KOSPI index on the 21st is also expected to enter a correction phase, reflecting the recent steep upward trend.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,082.00, down 475.92 points (1.27%) from the previous session. The Standard & Poor's (S&P) 500 index fell 70.02 points (1.47%) to 4,698.35, and the Nasdaq index dropped 225.28 points (1.50%) to 14,777.94. The decline is interpreted as a reflection of the high valuation pressure following the Nasdaq's nine consecutive days of gains until the previous day. Although the indices initially continued to rise in early trading, they widened their losses in the afternoon, closing down more than 1% across all three indices.

[Image source=Yonhap News]

By sector, all 11 major sectors of the S&P 500 declined. FedEx, a transportation company, plunged 12.1% after lowering its sales forecast for next year due to disappointing quarterly results that fell short of market expectations and weakening demand. Tesla (-3.9%) and Nvidia (-3.0%) also closed lower. Alphabet showed strength on news of a restructuring in its advertising sales division, hitting a 52-week high during the session, but gains narrowed due to profit-taking, ending up just 1.2%.

Seokhwan Kim, a researcher at Mirae Asset Securities, analyzed, "The Dow Jones index, which had been hitting record highs for consecutive days, turned lower after 10 trading days," adding, "This is due to cautious remarks about the recent rise and increased desire for profit-taking amid weak demand in the 20-year Treasury bond auction."

Comments from a U.S. Federal Reserve (Fed) official cautioning against excessive expectations for an interest rate cut also appeared to have an impact. Patrick Harker, President of the Federal Reserve Bank of Philadelphia, emphasized in a radio interview that "the fight against inflation is not over yet."

The domestic stock market is also expected to be influenced by the sharp decline in the U.S. market and policy issues. Jihyun Kim, a researcher at Kiwoom Securities, said, "We expect limited movements as attention focuses on the U.S. market correction and news about the easing of major shareholder requirements during the trading session," adding, "Although expectations for the easing of major shareholder requirements are rising, reports suggesting that the decision will likely come after the inauguration of the Deputy Prime Minister for Economy have led the KOSDAQ to adopt a cautious stance." However, he added, "Micron reported better-than-expected earnings after market close, positively mentioning the AI boom and expanded data center investments, leading to a more than 4% gain in after-hours trading," and "Comments related to HBM are expected to affect the stock prices of Samsung Electronics and SK Hynix."