[Good Morning Market] US Stock Market Closes Lower, Domestic Market in "Political Uncertainty Phase"

While the US stock market closed lower, the domestic stock market is expected to be cautious of short-term volatility caused by political risks.

Reuters Yonhap News

On the 9th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 240.59 points (0.54%) from the previous trading day to close at 44,401.93. The S&P 500 index, centered on large-cap stocks, dropped 37.42 points (0.61%) to 6,052.85, and the tech-heavy Nasdaq index closed down 123.08 points (0.62%) at 19,736.69.

With all three major indices closing lower, the Dow fell for the third consecutive trading day after surpassing the 45,000 mark for the first time on the 4th. The S&P 500 and Nasdaq indices retreated from their record highs set on the 6th, the previous trading day.

By sector, only healthcare (0.22%) and real estate (0.09%) rose, while all other sectors declined. In particular, the financials, communication services, and utilities sectors fell by more than 1%.

Looking at individual stocks, among the 'Magnificent 7' large tech stocks, Microsoft (0.55%), Apple (1.61%), Alphabet (0.49%), and Tesla (0.15%) rose, while Nvidia (-2.55%), Amazon (-0.39%), and Meta (-1.64%) declined.

The domestic stock market plunged the previous day as concerns over a prolonged impeachment crisis triggered a sell-off mainly by individual investors. Junho Byun, a researcher at IBK Investment & Securities, said, "Although the market has sharply declined in the short term, highlighting price merits, it is ambiguous to say it is technically oversold. From a valuation perspective, the KOSPI’s 12-month forward price-to-book ratio (PBR) has fallen below 0.8, entering an attractive range, but there have been cases like in 2019 when it dropped to around 0.76, so a short-term undershooting possibility cannot be ruled out."

Janghwan Na, a researcher at NH Investment & Securities, said, "Political uncertainty may continue for the time being. With political events such as the US Federal Open Market Committee (FOMC), US debt ceiling, and budget negotiations approaching at the end of the year and early next year, stock prices are expected to move within a limited box range."

However, there is an analysis that the recent sharp decline is unlikely to spread to financial system instability. Yoonjung Kim, a researcher at LS Securities, said, "Short-term stock market impacts due to highlighted political risks are inevitable, but the possibility of a structural decline is limited because this situation is not caused by the country or the financial system. Additional risks such as a downgrade in the country’s credit rating, which the market fears, are also limited," she pointed out.