[Good Morning Stock Market] Apple Slumps Amid Weakened Rate Cut Expectations... KOSPI Expected to Weaken

As expectations for interest rate cuts weaken, the U.S. New York stock market closed mixed on the 4th (local time) due to stock price adjustments in big tech companies such as Apple.

On that day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,440.34, up 0.03% from the previous trading day. The S&P 500 index closed at 4,688.68, down 0.34% from the previous trading day, and the tech-heavy Nasdaq index closed at 14,510.30, down 0.56%.

The Nasdaq index closed lower for five consecutive trading days since December 28 of last year. This was due to a simultaneous decline in the stock prices of major constituent companies such as Amazon.com (-2.63%), Alphabet (-1.65%), Apple (-1.27%), and Microsoft (-0.72%).

Park Kwang-nam, a researcher at Mirae Asset Securities, explained, "The U.S. stock market closed mixed as selling pressure emerged toward the end of the session amid concerns over rising interest rates." He added, "Following the release of the minutes from the U.S. Federal Open Market Committee (FOMC) the previous day, expectations for an early interest rate cut diminished, and positive economic indicators such as employment and services led the 10-year Treasury yield to surpass 4%. However, the intraday volatility was limited due to the earlier decline priced in since the beginning of the year and reduced concerns about economic slowdown."

Apple's stock price fell more than 5% this week, dropping to $181.91. Although it surpassed $190 during the year-end rally, it gave back the previous gains. The decline on this day was mainly attributed to consecutive downgrades of the stock by investment banks, following Barclays, with Piper Sandler also lowering its rating. The main reasons cited were weak iPhone 15 sales last year and limited expectations for the iPhone 16 this year.

The employment data released that day showed strong performance, reducing expectations for an early interest rate cut. According to Automatic Data Processing (ADP), private sector employment in the U.S. increased by 164,000 in December compared to the previous month. This exceeded Wall Street estimates and was significantly higher than the previous month's increase of 101,000. The weekly initial jobless claims released on the same day also fell short of Wall Street forecasts. According to the U.S. Department of Labor, claims for the week of December 24-30 decreased by 18,000 from the previous week to 202,000. Wall Street had expected 216,000 claims.

Han Ji-young, a researcher at Kiwoom Securities, said, "Ahead of the U.S. employment report release, both ADP private employment and initial jobless claims showed strong results, reducing expectations for an early interest rate cut." She added, "In particular, the increase in employment in service sectors such as leisure, construction, and finance was notable, raising concerns about wage inflation."

The domestic KOSPI is also expected to remain sluggish on the day. Yang Hae-jung, a researcher at DS Investment & Securities, said, "Although there will be adjustments, the possibility of a drastic decline like in October last year is low," explaining, "Considering the highly correlated interest rate movements, the likelihood of interest rates rising as much as then is low." He added, "Even though the market had anticipated it, it is reasonable to see that the peak has already passed in terms of interest rate levels."

The researcher forecasted, "With the perception of excessive decline still valid, the 10-year Treasury yield reaching the 4% range, and adjustments in U.S. tech stocks, a cautious stance will deepen, resulting in limited movements."

Kim Dae-wook, a researcher at Hana Securities, analyzed, "The KOSDAQ's outperformance compared to the KOSPI is noticeable," adding, "Especially in KOSDAQ, where the semiconductor and bio sectors have a high weighting, the rise in the bio sector driven by expectations of interest rate cuts has successfully supported the index."