[Good Morning Market] US Stocks Slightly Lower... "Focus on KOSPI AI and Electric Vehicle Stocks"

M7 Earnings Caution Amid 3 Major Indexes Falling Together
Tesla 'Earnings Shock' Alphabet 'Earnings Surprise'
KOSPI Expected to Show Volatile Market Conditions

The U.S. New York stock market closed slightly lower across the board amid uncertainties surrounding the presidential election and caution over the earnings of the M7 (Magnificent 7: Apple, Microsoft, Google Alphabet, Amazon, Nvidia, Meta, Tesla). After the market closed, Tesla and Alphabet announced contrasting earnings, which is expected to impact domestic stocks related to electric vehicles and artificial intelligence (AI).

On the 23rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 40,358.09, down 57.35 points (0.14%) from the previous session. The S&P 500 index fell 8.67 points (0.16%) to 5555.75, and the Nasdaq index dropped 10.22 points (0.06%) to 17,997.35.

[Image source=UPI Yonhap News]

As the Q2 earnings season officially began, stock indices fluctuated within a narrow range. Spotify (12%), GE Aerospace (5.7%), Danaher (5.3%), Lockheed Martin (5.6%), and MSCI (7.9%) showed strong gains following positive earnings reports, while UPS (-12%), NXP Semiconductors (-7.6%), and Comcast (-2.6%) declined due to disappointing results. Semiconductor companies for automobiles such as NXP Semiconductors and peer firms Analog Devices (-4.1%), Microchip (-3.7%), and ON Semiconductor (-5.1%) also fell together. The Ethereum spot exchange-traded fund (ETF), which began trading on the New York market, showed a slight decline.

After the market closed, Tesla and Google’s parent company Alphabet reported contrasting earnings. Alphabet exceeded market expectations with revenue of $84.74 billion and earnings per share (EPS) of $1.89. In contrast, Tesla’s automotive revenue was $19.878 billion and EPS was 52 cents, down 7% and 43% respectively from the previous year. The remaining M7 companies will report earnings in the following order: Microsoft (25th), Meta (26th), Apple and Amazon (August 3rd), and Nvidia (August 28th). This Q2 earnings season is widely expected to heavily depend on the M7.

U.S. economic media CNBC analyzed, "With big tech companies’ Q2 earnings reports lined up, major New York stock indices declined slightly amid earnings caution."

Among the indicators released that day was the National Association of Realtors (NAR) report on U.S. existing home sales for June (seasonally adjusted), which showed an annualized 3.89 million units, down 5.4% from the previous month. This was the lowest level since December last year. The decline in housing transactions is attributed to high interest rates, while home prices remain at record highs. The median price of existing homes in June rose 4.1% year-over-year to $426,000.

On the 23rd, the KOSPI closed at 2774.29, up 10.78 points (0.39%) from the previous trading day. After four consecutive days of decline influenced by weakness in U.S. tech stocks and presidential election uncertainties, the market reversed to an upward trend. Semiconductor stocks and power equipment-related earnings stocks showed notable gains.

Han Ji-young and Lee Seong-hoon, researchers at Kiwoom Securities, said, "There is an incentive for bargain buying across the domestic market, but volatility is expected due to the mixed earnings of Tesla and Alphabet amid the confusion of the U.S. presidential election. From an industry perspective, attention should be paid to stock price changes in electric vehicle and AI-related stocks."