[Good Morning Market] US Treasury Yield Decline... Strong Performance Expected Centered on Pharmaceutical and Bio Sectors

On the 6th, the domestic stock market is expected to rebound, centered on the pharmaceutical and bio sectors, following a decline in U.S. Treasury yields.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,873.28, up 317.24 points (0.71%) from the previous session. The S&P 500 index rose 23.60 points (0.39%) to 6,061.48, and the Nasdaq Composite index ended the day at 19,692.33, up 38.31 points (0.19%).

The New York stock market succeeded in rebounding for two consecutive days, influenced by a partial easing of tariff policies by President Donald Trump, which had caused increased market volatility earlier in the week. The January Institute for Supply Management (ISM) Services Purchasing Managers' Index (PMI) released that day recorded 52.8, significantly below both the market expectation (54.3) and the previous month’s figure (54.0). This is generally seen as a sign of a slowdown in the service sector.

Additionally, the Atlanta Federal Reserve Bank’s GDPNow forecast for first-quarter GDP growth, announced on the 5th, was revised downward from 3.9% to 2.9%, reflecting expectations of slower consumer growth. The recent weakening of U.S. consumer momentum is considered a factor that reduces inflationary pressure concerns, so unless accompanied by a sharp contraction in consumption, it is necessary to keep in mind that falling market interest rates could positively affect the stock market.

By sector, stocks related to artificial intelligence (AI) infrastructure investment, which had recently experienced significant corrections, led the market rebound. Large internet platform companies announced plans to expand capital expenditures despite the emergence of low-cost AI models.

In particular, Alphabet announced an annual capital expenditure plan of $75 billion, significantly exceeding Wall Street’s estimate of $58.1 billion. However, weak sales in the cloud segment weighed on the stock price. This suggests the need to continue infrastructure investment in preparation for a surge in AI service demand.

In the semiconductor sector, AMD fell 6.27% due to weaker-than-expected earnings. The lack of any special AI-related issues also contributed to the stock’s weakness. Toy manufacturer Mattel surged 15.3% after announcing positive earnings forecasts despite tariff concerns.

The previous day, the domestic stock market rose, led by the internet and software sectors, as foreign capital flowed in amid expectations of progress in U.S.-China tariff negotiations, easing tariff-related noise. Factors such as the decline in the 10-year U.S. Treasury yield and the ripple effects of DeepSeek also contributed.

Seonghun Lee, a researcher at Kiwoom Securities, explained, “On this day, the domestic stock market is expected to rebound, reflecting factors such as the decline in the 10-year U.S. Treasury yield, with a focus on sectors benefiting from lower interest rates like pharmaceuticals and bio. The won-dollar exchange rate, which had surged to the high 1460 won level due to tariff policy risks from Trump, has stabilized again to the mid-1440 won level. With the dollar also falling to 107.4 points the previous day, attention should be paid to whether the won-dollar exchange rate, a key point for foreign capital inflows, will continue its downward trend.”