[Good Morning Stock Market] US Stocks Rise on 'Pivot' Expectations... "KOSPI to Experience Limited Fluctuations for the Time Being"

Rising Together on Rate Cut Expectations
S&P 500 Nears All-Time High Again
"Focus on Direction Amid Major Issues"

The U.S. New York stock market closed higher across the board on news that a rate cut in September is highly likely.

[Image source=Reuters Yonhap News]

On the 21st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 40,890.49, up 55.52 points (0.14%) from the previous session. The S&P 500 index rose 23.73 points (0.42%) to 5620.85, and the Nasdaq index closed at 17,918.99, up 102.05 points (0.57%). Notably, the S&P 500 approached its all-time high (5667.21) within about a month by less than 1%, raising expectations for a new record.

It was a market that started weak but strengthened later. The market showed weakness early on after news that the annual U.S. nonfarm payrolls decreased by 818,000 from the previous 2.9 million. However, investor sentiment revived after news that the majority of members supported a rate cut at the July Federal Open Market Committee (FOMC) meeting. The released FOMC minutes showed that participants mostly agreed that if current data trends continue, it would be appropriate to ease policy at the next meeting. The market interpreted this as a clear signal that a 'pivot' (monetary policy shift) would begin with a rate cut in September.

Looking at individual stocks, the Magnificent 7 (M7: Apple, Microsoft, Google Alphabet, Amazon, Nvidia, Meta, Tesla), the major tech stocks, showed mixed performance. Nvidia rose 0.98%, Meta (1.60%), Amazon (0.69%), and Tesla (0.98%) closed higher, but Microsoft (-0.15%), Apple (-0.05%), and Google Alphabet (-0.79%) ended lower. Netflix, which hit an all-time high the previous day, fell 0.20%. Target, operating warehouse stores, surged 10% on an earnings surprise (better-than-expected results). Additionally, Keysight Technologies, a measurement instrument manufacturer (14%), and Toll Brothers, a luxury home builder (5.6%), showed gains due to strong quarterly results and improved annual earnings outlooks.

The market is now focusing on the upcoming Jackson Hole meeting scheduled for the 23rd. Jerome Powell, Chair of the U.S. Federal Reserve (Fed), is expected to deliver a keynote speech on the economic outlook. If his remarks lean hawkish (favoring monetary tightening) or dovish (favoring monetary easing), the market could experience volatility. Nvidia’s Q2 earnings announcement on the 28th is also considered a potential turning point that could shake the market.

On the 21st, the KOSPI closed at 2701.13, up 0.17% (4.50 points) from the previous trading day. Although it barely recovered to the 2700 level, major semiconductor stocks such as Samsung Electronics and SK Hynix all closed lower. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Recently, the domestic stock market has shown a tense balance between expectations and uncertainties. Especially given the sensitivity of the domestic economy to the global economy, it is difficult to reflect only one side, so attention should be paid to the direction shaped by digesting major issues (Jackson Hole, Nvidia earnings, etc.)." Kim expects limited fluctuations to continue for the time being.