[Good Morning Market] New York Stocks Plunge on Semiconductor Sell-off... Caution Spreads in Korean Market

Semiconductor Stocks Fall on Reports of OpenAI's "Stargate" Setback
Major Companies to Announce Second-Quarter Earnings This Week

On July 23, caution is spreading in the domestic stock market as the three major indices on the New York Stock Exchange closed mixed, partly due to reports of setbacks in OpenAI's "Stargate" project. The domestic market is also expected to show a mixed trend, influenced by weakness in semiconductor stocks and the impact of major companies' earnings announcements.

New York Stock Exchange. Photo by AFP

On July 22 (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,502.44, up 179.37 points (0.40%) from the previous session. The S&P 500 Index finished at 6,309.62, up 4.02 points (0.06%), while the Nasdaq Composite Index ended at 20,892.69, down 81.49 points (0.39%).

The S&P 500 Index, which had set a record high the previous day, once again reached a new all-time high. This marks the 11th record high for the year. The surge appears to have been driven by increased buying interest, as expectations for large-cap earnings grew during the second-quarter earnings season.

However, semiconductor stocks fell across the board due to negative news related to OpenAI. The Wall Street Journal reported the previous day that, due to difficulties in raising capital, SoftBank and OpenAI would scale back their jointly pursued $500 billion (approximately 690 trillion won) artificial intelligence (AI) infrastructure project, "Stargate," which shook the entire semiconductor sector.

Nvidia shares plunged 2.54% to $167.03, reducing its market capitalization to $4.073 trillion. Other major semiconductor companies also saw their share prices fall, with Micron down 3.54%, Broadcom down 3.34%, and Intel down 0.09%. Aerospace and defense company Lockheed Martin tumbled 10.8% after its second-quarter revenue fell short of market expectations. Tobacco company Philip Morris also dropped 8.4% due to disappointing earnings.

The domestic stock market is also expected to be mixed on July 23. Han Ji-young, a researcher at Kiwoom Securities, commented, "Since last week, the KOSPI has repeatedly touched the 3,200 level but has struggled to settle above it. The market is still feeling the pressure from the record surge in June, and growing caution over the second-quarter earnings season in both Korea and the United States is creating a restrictive environment for the stock market."

Alphabet and Tesla are set to announce their earnings on July 23, marking the official start of the second-quarter earnings season for the so-called "Magnificent 7" large-cap tech stocks.

Han also stated, "The domestic policy momentum that has spread since June, along with the profit momentum in leading sectors such as shipbuilding and defense, remains intact. Therefore, the probability of a sharp market downturn or a significant drop in index levels is considered low. With the second-quarter earnings of the U.S. Magnificent 7 and Korea's key sectors scheduled for later this week and next week, it is more appropriate to consider buying in phases during market corrections rather than chasing rebounds."