[Good Morning Stock Market] 'High Point Concerns' US Stock Market Closes Mixed... KOSPI Expected Slightly Lower

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), speaking at the New York Economic Club meeting
[Image source=Yonhap News]

The U.S. stock market closed mixed amid concerns over peak levels, while the Korean stock market is expected to start slightly lower. Amid growing expectations for a rate cut in the U.S. in June, the anticipation of a revaluation across the Korean stock market remains valid.

On the 22nd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,475.90, down 0.77% from the previous session. On the same day, the S&P 500 index fell 0.14% to 5,234.18, while the Nasdaq index rose 0.16% to close at 16,428.82.

Previously, the three major indices had set record highs for two consecutive days. Expectations for a rate cut within the year and a stronger-than-expected economic environment supported stock prices, but on this day, the indices diverged due to concerns over peak levels.

The U.S. market closed mixed despite a strong dollar, buoyed by gains in Nvidia and Alphabet. Positive evaluations of these major companies' artificial intelligence (AI) industries were seen as limiting downside. Notably, Nvidia surged over 3% following UBS's upgrade of its price target from $800 to $1,100. Alphabet also rose 2%, closing higher after Wedbush upgraded its price target and investment rating, recognizing it as a clear beneficiary of AI.

On Wall Street, the first rate cut by the U.S. Federal Reserve (Fed) is expected to begin in June. According to the Chicago Mercantile Exchange (CME) FedWatch, the probability of a Fed rate cut in June rose significantly to around 75% from the early-week level of the 50% range. However, concerns were raised that the market may have already priced in the Fed's rate cut expectations.

The Korean stock market is also paying close attention to policy changes in benchmark interest rates by major central banks such as the Fed and the European Central Bank (ECB). Han Ji-young, a strategist at Kiwoom Securities, analyzed, "The KOSPI is expected to show a neutral price range (2,670 to 2,790 points). Despite valid expectations for policy shifts by major central banks this week, the absence of new positive catalysts, short-term level pressures, and volatility in the won-dollar exchange rate will create an environment that limits further upward movement of the index."

Last week, the KOSPI closed down 0.23% at 2,748.56. While AI stocks experienced profit-taking and low price-to-book ratio (PBR) stocks weakened together, rotation trading occurred mainly in sectors with individual positive factors such as biotech, shipbuilding, and chemicals.

The KOSPI is expected to start slightly lower today. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The KOSPI is likely to start in a slightly lower range," adding, "The possibility of continued revaluation expectations for the domestic stock market is high."