[Good Morning Stock Market] Nasdaq Hits New High Again... "KOSPI Expected to Rise Centered on Large-Cap Stocks"

S&P 500 and Nasdaq Reach All-Time Highs
AI Semiconductor and Electric Vehicle Stocks Rally
"Large Caps Expected to Show Strong Performance"

On the 4th, the KOSPI is expected to see gains concentrated in large-cap stocks and specific sectors.

[Image source=UPI Yonhap News]

On the 3rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,308.00, down 23.85 points (0.06%) from the previous session. The S&P 500 index rose 28.01 points (0.51%) to 5,537.02, and the Nasdaq index closed up 159.54 points (0.88%) at 18,188.30.

The S&P 500 and Nasdaq indices hit record closing highs again after three trading days. Nvidia and Tesla notably led the index gains. Nvidia, which had recently been weak, closed up 4.57% at $128.28. Riding Nvidia’s strength, AI semiconductor stocks such as Broadcom (4.3%) and Micron (3.2%) also showed strong performance. Tesla, whose Q2 vehicle deliveries exceeded market expectations, rose 6.54%. Tesla has been rising for seven consecutive trading days, nearly recovering its losses for the year. Chinese electric vehicle manufacturers XPeng (9.0%), Nio (7.6%), and Li Auto (6.9%) also showed strong gains. On the other hand, Amazon fell 1.3% following news that founder Jeff Bezos plans to sell $5 billion worth of shares. Danish pharmaceutical company Novo Nordisk closed down 2.6% amid reports that its obesity treatment drug may cause blindness.

Investor sentiment was boosted by a series of indicators suggesting a cooling U.S. labor market. This is one sign that inflation is easing and could increase the likelihood of interest rate cuts. According to U.S. employment data provider Automatic Data Processing (ADP), private sector employment in the U.S. increased by 150,000 in June compared to the previous month, the smallest increase in four months since January (111,000). This also fell short of Dow Jones’ forecast of 160,000. Meanwhile, initial jobless claims for the week of June 23-29 rose by 4,000 to 238,000. Indicators also showed that the service sector is entering a contraction phase. According to the Institute for Supply Management (ISM), the June service sector Purchasing Managers’ Index (PMI) dropped 5 points from 53.8 in May to 48.8.

Following news of slowing employment and economic activity, U.S. Treasury yields declined. The 10-year yield fell 0.081 percentage points (1.83%) to 4.355%, and the 2-year yield dropped 0.031 percentage points (0.65%) to 4.7080%.

The previous day, the KOSPI closed at 2,794.01, up 13.15 points (0.47%) from the previous session. Although foreign investors showed net selling pressure during the session causing a temporary decline, they turned to buying, supported by institutional purchases, which helped prop up the index. Secondary battery stocks rose on Tesla’s positive momentum, and financial stocks, expected to benefit significantly from the government’s 'Value-Up' tax support announcement, showed strength.

Kiwoom Securities researchers Ji-hyun Kim and Ji-young Han said, "With market interest rates falling and the KRW-USD exchange rate stabilizing, a favorable trend centered on large-cap stocks is expected to continue. However, whether additional profit-taking selling emerges from existing leading stocks will likely limit the spread of risk-on sentiment (investor optimism and willingness to take greater risks)." Seok-hwan Kim, a researcher at Mirae Asset Securities, said, "Rather than broad-based gains, a differentiated movement concentrated in certain companies and sectors is expected."