[Good Morning Stock Market] US Big Tech Plummets... "Increased Downside Risk for Domestic Market"

The U.S. stock market plunged due to disappointing big tech (large information technology companies) earnings and concerns over economic slowdown, leading to expectations that the domestic stock market on the 25th will face increased downside risks and a growing preference for safe-haven assets.

[Image source=Getty Images Yonhap News]

On the 24th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 39,853.87, down 504.22 points (1.25%) from the previous trading day. The S&P 500 index, centered on large-cap stocks, ended at 5,427.13, down 128.61 points (2.31%). This was the largest daily drop since December 2022. The tech-heavy Nasdaq and Nasdaq 100 indices recorded declines in the mid-3% range, marking their biggest drops since October 2022. The Nasdaq index plunged 654.94 points (3.64%) to close at 17,342.41.

By sector, Information Technology (IT) fell more than 4%. Consumer Discretionary and Communication Services dropped 3.9% and 3.7%, respectively, highlighting significant declines in these three sectors with large market capitalization weights. As a result, the market capitalization of the Magnificent 7 (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, Tesla) evaporated by about $760 billion. Disappointing earnings reports from related companies and concerns over economic slowdown weighed heavily on the stock market. Alphabet fell sharply by 5.03%, and Tesla plummeted by a staggering 12.33%.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 1.5%, and the MSCI Emerging Markets Index ETF also dropped 1.5%. Eurex KOSPI 200 futures declined by 1.3%.

On the same day, Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The domestic stock market will see increased downside risks and a growing preference for safe-haven assets. First, the recent sharp declines in secondary battery stocks are expected to continue. Therefore, the relative weakness of the KOSDAQ index is expected to be greater, but sectors like pharmaceuticals and healthcare may partially offset this."

He added, "On the other hand, the KOSPI may see an expanded decline due to weakness in key sectors such as semiconductors, automobiles, and secondary batteries. It is likely to find a bottom around 2,720 to 2,730 points, where the 100-day moving average is located during intraday trading."

Meanwhile, the 1-month non-deliverable forward (NDF) won-dollar exchange rate in New York stood at 1,381 won, and the won-dollar exchange rate is expected to start the day in a stable range.