[Good Morning Stock Market] US Stock Market Rises After 4 Days... Expectation to Stimulate KOSPI Investor Sentiment

NVIDIA Rebounds, Leading Gains in Major Tech Stocks
Retreating Rate Cut Expectations... Growing Pessimism on US Economy
"NVIDIA Boost Expected to Stimulate KOSPI Investor Sentiment"

With the rebound of tech stocks including Nvidia in the U.S. stock market, the KOSPI is also expected to rise as investor sentiment improves.

[Image source=Reuters Yonhap News]

On the 25th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,112.16, down 299.05 points (0.76%) from the previous session. The S&P 500 rose 21.43 points (0.39%) to 5,469.30, and the Nasdaq increased by 220.83 points (1.26%) to close at 17,717.65. The S&P 500 and Nasdaq posted gains for the first time in four trading days.

Buying interest in Nvidia, the leader in artificial intelligence (AI) stocks, spread to other large tech stocks, driving gains in the S&P 500 and Nasdaq, while the Dow showed a mixed trend with a decline. Nvidia rose 6.76%, marking a rebound after four trading days and regaining a market capitalization of $3 trillion. Although there was no specific news, it appears that a rebound buying wave emerged following recent declines. Alphabet (2.7%) and Meta (2.3%) also rose, pushing the Magnificent 7 (M7: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, Tesla) exchange-traded fund (ETF) up 2.6% compared to the previous day. However, about 80% of S&P 500 constituent companies closed lower or flat, indicating that buying interest was concentrated in large-cap stocks. Electric vehicle maker Rivian’s stock surged 47% in after-hours trading following news of a large-scale investment from Germany’s Volkswagen.

Expectations for interest rate cuts are gradually fading. Michelle Bowman, a prominent "hawk" (favoring monetary tightening) on the U.S. Federal Reserve (Fed), said, "It will eventually be appropriate to lower the benchmark interest rate once it becomes clear that inflation is consistently moving toward our 2% target," but added, "It is not yet the right time for a rate cut." This implies that if inflation does not decrease from its current level, a rate cut will be difficult.

Consumer pessimism about the U.S. economy is also increasing. The Conference Board reported that the U.S. Consumer Confidence Index for June was 100.4 (1985=100), down 0.9 points from May’s 101.3. The consumer confidence index is interpreted as an indicator of whether the economy is improving or deteriorating. MarketWatch analyzed this as "meaning that Americans’ uncertainty about the future U.S. economy has increased." In particular, the gap in confidence index between high-income and low-income groups is widening.

The previous day, the KOSPI closed at 2,774.39, up 9.66 points (0.35%) from the previous session. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The rebound in tech stocks including Nvidia is expected to stimulate investor sentiment and trigger a rebound buying following recent declines," but added, "However, the widening depreciation of the Korean won is expected to limit the upside." The won-dollar exchange rate has been trading above 1,380 won for six consecutive trading days recently, threatening the 1,400 won level.