[Good Morning Market] US Stocks Fall Across the Board Amid Semiconductor Plunge and Inflation Concerns

Semiconductor Stocks Plunge Together Amid TSMC Earnings Concerns
Tension Ahead of Inflation Data, the 'Key' to Interest Rate Decision
KOSPI Stabilizes from Negative Factors... 'Low Price Merit' Highlighted

U.S. stock markets closed lower across the board. Investor sentiment appears to have weakened due to a combination of caution over key inflation indicators and a sharp decline in semiconductor stocks.

Reuters Yonhap News

On the 10th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed down 154.10 points (0.35%) at 44,247.83. The S&P 500 index fell 17.94 points (0.30%) to 6,034.91, and the Nasdaq Composite dropped 49.45 points (0.25%) to 19,687.24.

Although major tech stocks showed strength early in the session, the mood reversed as concerns over earnings at TSMC, the world's largest foundry company, spread. TSMC's November sales increased 34% year-over-year but declined 12% compared to October. TSMC shares fell 3.63%, and other major semiconductor stocks also slumped. Nvidia (-2.69%), Broadcom (-3.98%), AMD (-2.39%), Qualcomm (-2.66%), and Intel (-3.12%) all declined together. The Philadelphia Semiconductor Index also dropped 2.5%.

Looking at other major stocks, Apple closed at $247.77, marking an all-time closing high. Citigroup selected Apple as its top priority stock for next year, forecasting that "the services business will expand while product sales will slightly decline." Alphabet, Google's parent company, unveiled its self-developed quantum chip 'Willow' and closed up 5.59% at $185.17. Tesla rose 2.87% to close at $400.99, approaching its all-time high of $409.97 set in 2021. Morgan Stanley named Tesla as its top priority stock for next year, expecting leadership in AI, data centers, renewable energy, and robotics.

The market is focusing on the November Consumer Price Index (CPI) and November Producer Price Index (PPI), which will be released on the 11th and 12th, respectively. These two indicators are expected to influence the U.S. Federal Reserve's monetary policy. While predictions favor a third rate cut at the December Federal Open Market Committee (FOMC) meeting, there is also analysis suggesting that if inflation indicators come out high, the rate cut trend could be halted.

On the 10th, the KOSPI closed at 2,417.84, up 2.43% (57.26 points) from the previous trading day. This marked the first rebound since the martial law situation. Institutional investors led the rise with net purchases of 459.7 billion won. The rapid progress of investigations aimed at political stabilization, the National Assembly's passage of an income tax law amendment abolishing the financial investment income tax, and expectations of economic stimulus in China all contributed to a revival of investor sentiment.

Kiwoom Securities researchers Han Ji-young and Lee Seong-hoon analyzed, "There is a growing atmosphere in the political sphere to resolve the current political instability, and it is reassuring that no new political negative factors have emerged to exert sudden downward pressure on the stock market." They added, "Despite some short-term profit-taking following yesterday’s surge, the domestic stock market is expected to recover, especially among oversold stocks, supported by the anticipation of resolving domestic political turmoil, the news of the financial investment income tax abolition, and the cautious sentiment ahead of the U.S. November CPI event."

Shinhan Investment Corp. researcher Noh Dong-gil said, "Currently, those increasing their domestic stock holdings see it as an opportunity to buy high-quality stocks that have usually traded at relatively high prices at a discount." He explained, "For example, foreigners have used the price adjustments in semiconductor and defense stocks as buying opportunities but have continued to reduce their holdings in policy-related stocks (value-up stocks)." He added, "What can be confirmed from foreign trading patterns is that despite the expansion of domestic political uncertainty and policy gaps, the pace of their reduction in holdings is actually slowing."