[Good Morning Stock Market] Will the Domestic Market Continue Its Rebound? "A Range with Increased Incentives for Bargain Buying"

Attention is focused on whether the domestic stock market will continue its rebound following last week. Analysts in the securities industry suggest that the domestic market is currently in a phase where the incentive for bargain hunting has increased, especially among oversold stocks.

Reuters Yonhap News

On the 22nd (local time), the Dow Jones Industrial Average at the New York Stock Exchange (NYSE) rose 426.16 points (0.97%) from the previous trading day to close at 44,296.51. The S&P 500, which is centered on large-cap stocks, increased by 20.63 points (0.35%) to 5,969.34, while the tech-heavy Nasdaq rose 31.23 points (0.16%) to close at 19,003.65.

Last week, despite concerns over weakness in technology stocks, the U.S. stock market closed with all three major indices rising, driven by high expectations for economic improvement. The Russell 2000 index, composed of small- and mid-cap stocks, also jumped 1.80%.

By sector, among the 11 sectors comprising the S&P 500, eight sectors rose: Consumer Discretionary (1.18%), Consumer Staples (1.02%), Energy (0.11%), Financials (1.11%), Healthcare (0.08%), Industrials (1.36%), Materials (0.55%), and Real Estate (0.84%). Conversely, three sectors declined: Technology (-0.22%), Communication Services (-0.69%), and Utilities (-0.66%).

Among individual stocks, within the large tech group known as the 'Magnificent 7 (M7)', Microsoft (1.00%), Apple (0.59%), and Tesla (3.80%) rose, while Nvidia (-3.22%), Amazon (-0.64%), Alphabet (-1.71%), and Meta (-0.70%) fell.

Apparel specialist Gap surged 12.84% on strong third-quarter results that exceeded market expectations in both sales and net profit, along with a bright earnings outlook.

Attention is also on whether bargain buying will continue to flow into the domestic market following last week. Han Ji-young, a researcher at Kiwoom Securities, said, "Both KOSPI and KOSDAQ are currently in a technically oversold state due to recent price declines, making valuations attractive and increasing the incentive for bargain hunting. This week, the domestic stock market is expected to raise its lows, especially among oversold stocks, amid short-term foreign investor supply-demand volatility and macroeconomic events during the week."

The 'Trump trade' (investing in assets that could benefit from Trump’s policies) still appears to warrant caution. Jo Jun-gi, a researcher at SK Securities, stated, "The market is likely to be volatile, reacting sensitively to narratives coming from President-elect Trump, who has been taking bold actions recently. Given that the current political landscape?with both the presidency and Congress controlled by the Republican Party?is expected to last at least two years, and that appointments have been made mainly from Trump loyalists or those aligned with his pledges, strong policy drives early in the term are clearly a risk to watch. However, there is also a considerable chance that the market will see a different pattern from the past, where beneficiary stocks underperformed after the term began."