[Good Morning Stock Market] US Stocks Hit New High Again... Domestic Market Faces 'Okseokgarigi' Challenge

Overnight, the U.S. Dow Jones Industrial Average posted its best performance since June 2023, while on the 17th, the domestic stock market is still expected to focus on 'separating the wheat from the chaff.'

All three major U.S. stock indices closed higher on the 16th (local time). Following Federal Reserve Chairman Jerome Powell's 'dovish (monetary easing preference)' remarks the previous day, expectations for a rate cut in September gained momentum, expanding the rally from tech stocks to small- and mid-cap stocks. The June retail sales data also exceeded expectations.

At the New York Stock Exchange (NYSE) that day, the blue-chip-focused Dow Jones Industrial Average rose 742.76 points (1.85%) from the previous trading day to close at 40,954.48, marking a record high for the second consecutive day. The daily gain was the largest since June 2023. The large-cap S&P 500 index also hit an all-time high, rising 35.98 points (0.64%) to 5667.2. The tech-heavy Nasdaq index closed at 18,509.34, up 36.77 points (0.2%).

By individual stocks, Bank of America (BoA) and Morgan Stanley rose 5.3% and 0.84%, respectively, after reporting earnings that exceeded market expectations. BoA stated that net interest income is expected to increase through the end of the year. With expectations of a rate cut, a rotation from large-cap to small- and mid-cap stocks occurred, pushing the Russell 2000 index, which focuses on small- and mid-cap stocks, up 3.5%, extending its five-day winning streak. Meanwhile, Nvidia fell 1.62%.

Expectations for a September rate cut drove investor sentiment. Chairman Powell, in a conversation with David Rubenstein, chairman of the U.S. private equity firm Carlyle Group, at the Washington D.C. Economic Club the previous day, said regarding inflation easing, "We did not gain additional confidence in the first quarter, but three indicators from the second quarter (April to June) have somewhat increased our confidence." He added, "Inflation has now declined, and the labor market has actually cooled," emphasizing, "We will look at both, and these two are in a much better balance."

The KOSPI closed slightly higher the previous day, supported by net buying from foreigners and institutions. The KOSPI ended up 0.18% at 2866.09. Samsung Electronics closed at 87,700 won, up 1.15% from the previous trading day. Hyundai Motor, Kia, and Samsung C&T rose more than 2%, while SK Hynix and Shinhan Financial Group gained over 1%.

On the other hand, the KOSDAQ index closed at 839.61, down 1.56% from the previous session. The relative weakness of the KOSDAQ is attributed mainly to the poor performance of secondary battery stocks, which are among the market capitalization leaders.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "In the domestic stock market, interest is expected to continue focusing on quality stocks and sectors rather than rotation."