[Good Morning Market] US Stock Market Closes Lower... "Domestic Market Faces Continued High Exchange Rate Burden"

Concerns that the pace of interest rate cuts by the U.S. Federal Reserve (Fed) will slow down led to a simultaneous decline in the three major indices of the New York Stock Exchange, while on the 18th, the Korean stock market is expected to continue to face caution due to high exchange rates and uncertainty.

On the 17th (local time), the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 43,449.9, down 267.58 points (0.61%) from the previous trading day. After surpassing the 45,000 mark for the first time in history earlier this month, the Dow experienced a nine-day consecutive decline, marking the longest downward streak in 46 years since 1978. The S&P 500, focused on large-cap stocks, fell 23.47 points (0.39%) to 6,050.61, and the Nasdaq, centered on technology stocks, dropped 64.83 points (0.32%) to 20,109.06.

In particular, profit-taking was heavy among major technology stocks. By individual stocks, Broadcom, a semiconductor company that recently surpassed a market capitalization of $1 trillion (approximately 1,438 trillion KRW) for the first time, plunged 3.91%. AI leader Nvidia fell 1.22%. JP Morgan Chase was down 0.52%, Morgan Stanley 1%, and Bank of America (BoA) 0.9%. Meanwhile, Tesla rose 3.64%, hitting an all-time high.

A trader is working at the New York Stock Exchange (NYSE) in the United States. Photo by Reuters and Yonhap News.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Despite U.S. retail sales exceeding expectations with a solid 0.7% increase last month, concerns about a slowdown in the Fed's pace of interest rate cuts have spread," adding, "Particularly, attention is focused on the results of this week's Federal Open Market Committee (FOMC) meeting regarding interest rate decisions."

Regarding the Korean stock market on this day, the securities industry forecasted that "the index's upper limit will be constrained due to the burden of high exchange rates." Kim Ji-won, a researcher at KB Securities, stated, "Domestically, even after the impeachment resolution, stock market instability such as high exchange rates persists. The caution that uncertainty has not been completely resolved is a burden," and diagnosed, "It is necessary to prepare for the possibility that unfavorable conditions for the stock market, such as 'Trump policy' risks and continued foreign capital outflows, may persist."

Han Ji-young, a researcher at Kiwoom Securities, said, "The domestic stock market is expected to see a price rebound as bargain buying flows in following the oversold perception from the previous day," but also predicted, "With major events such as the FOMC and Micron earnings scheduled for early the next day, a cautious sentiment will intervene, limiting the upside of stock prices."

He added, "One reason the domestic stock market has been frequently held back this month is the burden of the exchange rate. Although the shock from the martial law incident has entered a mitigation phase, the global dollar strength driven by FOMC caution continues, and the rapid rise in the exchange rate is hardly calming down," and explained, "There is a structural increase in demand for dollars due to the expansion of overseas investments by domestic companies and pension funds, as well as the surge in U.S. stock investments by domestic individual investors."