[New York Stock Market] S&P 500 and Nasdaq Hit New Highs Again... Korean Companies' Stock Prices Fall Amid 'Emergency Martial Law'

Sharp Drop in Korea-Related Stocks Amid Emergency Martial Law Declaration
Yoon's Lifting of Martial Law Partially Recovers Losses
US October Job Openings at 7.74 Million Exceed Expectations
Focus on November Employment Report to Be Released on the 6th

The three major indices of the U.S. New York Stock Exchange closed mixed on the 3rd (local time). As the market focused on the employment data released that day and took a breather, the S&P 500 and Nasdaq indices rose slightly, setting new all-time highs once again. After President Yoon Seok-yeol declared martial law, the stock prices of Korean companies listed on the New York Stock Exchange plummeted.

On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average (Dow) closed at 44,705.53, down 76.47 points (0.17%) from the previous trading day. The large-cap-focused S&P 500 index rose 2.73 points (0.05%) to 6,049.88, and the tech-heavy Nasdaq index increased by 76.96 points (0.4%) to 19,480.91, marking another record high.

By stock, Korean-related shares fell sharply following President Yoon's declaration of martial law. Coupang dropped 3.7%. POSCO Holdings fell 4.36%, KT declined 0.39%, and KB Financial showed a 1.67% weakness. President Yoon declared martial law in an emergency address on the night of the 3rd and announced the lifting of martial law early on the 4th after accepting the National Assembly's request. As a result, Korean company stocks listed on the New York Stock Exchange plunged sharply at the start of trading but narrowed their losses by the close.

The won-dollar exchange rate stood at 1,415.9 won as of 4:46 p.m. that day, up 0.85% from the previous day. It briefly surpassed the 1,440 won level for the first time in 2 years and 2 months since October 2022 in the morning, but calmed somewhat after President Yoon lifted the martial law.

Among major stocks, Super Micro Computer, which surged nearly 29% the previous day on news that no misconduct was found in the accounting investigation, fell 4.26%. Intel plunged 6.1%. The company announced the resignation of CEO Pat Gelsinger, who was brought in as a savior four years ago, the day before.

The New York stock market has been on the rise since the presidential election on the 5th of last month, when Trump, who promised business-friendly policies, won. Since the election, the S&P 500 index has risen 4.6%, the Nasdaq index 5.7%, and the Dow average index 5.9%. The market is hopeful for a "Santa Rally" with expectations that the positive momentum will continue into December.

Ken Mahoney, CEO of Mahoney Asset Management, said, "Since the election of a new president, the market has never fallen in December after rising more than 10%. This does not necessarily mean that stock prices will rise in December, but given the substantial inflow of funds even after the election, demand for stocks remains sufficient."

The U.S. job openings report released that morning signaled that the labor market remains robust. According to the U.S. Department of Labor's Job Openings and Labor Turnover Survey (JOLTs), job openings in October reached 7.74 million, exceeding both market expectations (7.51 million) and the previous month's figure (7.372 million). Layoffs were at their lowest level since June at 1.6 million, with a layoff rate of 1.0%. The increase in job openings and easing of layoffs indicate that labor demand is stabilizing.

Investors' attention is focused on the most important employment indicator that can gauge the U.S. labor market status: the November nonfarm payrolls report from the Department of Labor, to be released on the 6th. The market expects an increase of 200,000 in nonfarm payrolls last month. The unemployment rate is expected to remain steady at 4.1%. On the 4th, ADP's November private nonfarm employment report will be released, followed by weekly initial jobless claims on the 5th, among other employment indicators.

Terry Sandven, Chief Equity Strategist at U.S. Bank Wealth Management, said, "U.S. stocks are trading sideways ahead of the Friday (6th) jobs report," adding, "(The report) could provide insight into what the Federal Reserve (Fed) might do after the Federal Open Market Committee (FOMC) regular meeting on the 17th-18th."

The market currently places a high probability on the Fed cutting interest rates by 0.25 percentage points this month. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on that day priced in a 70.3% chance of a 0.25 percentage point rate cut at the December FOMC meeting and a 29.7% chance of holding rates steady.

Government bond yields are mixed by maturity. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 3 basis points (1 bp = 0.01 percentage points) to 4.22% compared to the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, moved down 2 basis points to around 4.17%.