[Good Morning Stock Market] US FOMC, Trump, Nvidia... Increased Volatility Amid Major Events

On the 17th, the KOSPI is expected to continue a phase of increased volatility ahead of the U.S. Federal Open Market Committee (FOMC) meeting, remarks on tariffs by U.S. President Donald Trump, and Nvidia's ‘GTC 2025’ event.

On the 14th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average surged 674.62 points (1.65%) to close at 41,488.19. The S&P 500 index rose 117.42 points (2.13%) to 5,638.94, and the Nasdaq Composite index jumped 451.08 points (2.61%) to finish at 17,754.09.

That day, despite weak consumer sentiment in March and rising inflation expectations, the New York stock market achieved a sharp rebound driven by an oversold perception following recent steep declines and optimism around GTC, which stimulated bargain buying centered on Nvidia (5.2%) and the 'Magnificent 7 (M7)'. Microsoft, Amazon, Apple, Meta, and Alphabet also recorded gains around 2%.

The preliminary University of Michigan Consumer Sentiment Index for March, released on the 15th, came in at 57.9, significantly below market expectations (63.1), marking the lowest level since November 2022. Additionally, both the 1-year expected inflation (February 4.3% → March 4.9%) and 5-year expected inflation (February 3.5% → March 3.9%) rose compared to the previous month.

Han Ji-young, a researcher at Kiwoom Securities, stated, “The combination of a sharp drop in consumer sentiment and rising inflation expectations in March was a factor that could raise stagflation concerns in the U.S. stock market, similar to the situation when the consumer sentiment index was announced in February.” However, she added, “Hard data such as the February Consumer Price Index (CPI) and Producer Price Index (PPI) helped alleviate fears of a sharp inflation surge in advance, which is why the stock market did not plunge.”

Furthermore, at the upcoming March 20 FOMC meeting, with a rate freeze already considered a given, key checkpoints include revised economic forecasts, changes in the dot plot, and whether quantitative tightening (QT) will be halted.

Han predicted, “Just as the stock market responded positively when Federal Reserve Chair Jerome Powell presented an optimistic economic outlook in early March, the sensitivity of stock prices will vary depending on the magnitude of changes in growth and inflation forecasts presented at this FOMC.”

In addition, important events are expected for AI and semiconductor-related stocks. At GTC 2025, which runs through the 21st, Nvidia CEO Jensen Huang is expected to unveil a new line of graphics processing units (GPUs) during his keynote speech on the 18th.

Han said, “Market attention will focus on how much Nvidia’s market dominance can be restored through new product announcements such as the upgraded Blackwell version and Rubin,” adding, “The Micron earnings report scheduled for the 21st could also impact domestic semiconductor stocks.”

She further analyzed, “Given that recent expectations of improvement in DRAM and NAND market conditions have driven the rebound in domestic semiconductor stocks, it will be important to see whether Micron’s earnings and conference call can justify this trend.”