[Good Morning Market] US Tech Stocks Lead Decline as New York Closes Mixed... "Korean Market Expected to Open Lower"

US Closes Mixed Amid Tech Weakness
"Korean Market Expected to Open Lower...
Bargain Hunting in Leading Domestic Stocks Key"

As the US stock market closed mixed, the Korean stock market on August 20 is expected to open lower due to pressures originating from the United States. However, the decline is likely to be limited as bargain hunting emerges for leading domestic stocks that plunged sharply the previous day.

On the 19th (local time) at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average closed at 44,922.27, up 10.45 points (0.02%) from the previous session. The large-cap S&P 500 index fell 37.78 points (0.59%) to 6,411.37, while the tech-heavy Nasdaq index dropped 314.82 points (1.46%) to close at 21,314.95.

On the 19th (local time), traders are working at the New York Stock Exchange in the United States. Photo by Reuters Yonhap News

Technology stocks broadly weakened, dragging down both the S&P 500 and Nasdaq indices. Some analysts attributed the decline to OpenAI CEO Sam Altman's comments about a potential bubble in AI-related stocks. Nvidia fell 3.5%, AMD dropped 5.44%, and Broadcom declined 3.55%. Tesla was down 1.75%, and Meta, Facebook's parent company, lost 2.07%. Palantir, an AI-based data analytics company, plunged 9.35%. In contrast, Intel surged 6.97% after news broke that Japan's SoftBank would invest $2 billion to acquire about a 2% stake. US retail giant Home Depot, despite missing market expectations for its second-quarter earnings, rose 3.19% as it maintained its annual outlook.

With no clear catalysts, investors are awaiting Federal Reserve Chair Jerome Powell's speech at Jackson Hole. The global financial markets are closely watching the message Powell will deliver regarding the economic outlook and monetary policy direction during his speech scheduled for 10 a.m. on August 22. Amid recent signs of a slowing labor market and mixed inflation forecasts, whether he signals an interest rate cut is a key point of attention.

Corporate earnings announcements also continue. In addition to Home Depot, major retailers such as Walmart, Target, and Lowe's will release their results this week. Amid aggressive tariff policies and the resulting divergent inflation outlooks, the market is looking to these companies' earnings to gauge the state of US consumer spending. Geopolitical factors, such as the push for a summit between Russia and Ukraine to end the war, are also drawing investors' attention.

Regarding the Korean stock market, Ji-Young Han, a researcher at Kiwoom Securities, said, "The market is expected to open lower due to US-related pressures such as uncertainty surrounding Jackson Hole and the simultaneous weakness of US AI stocks. However, the decline during the session is likely to be limited, supported by bargain hunting in leading domestic stocks that plunged the previous day."

The researcher added, "The KOSPI, which has recently faced resistance around the 3,200-point level, has fallen 2.3% over the past two trading days this week. Technically, it has broken below the 20-day moving average, a short-term trend line, and the sequential sharp declines in leading stocks in sectors such as machinery, utilities, shipbuilding, semiconductors, banking, and securities have intensified the perceived decline in the index."

He continued, "While the simultaneous correction of leading stocks is undermining overall confidence in the domestic market, it is unlikely that the KOSPI will move from a period of consolidation to a price correction. As expectations for a Fed rate cut remain valid, it is appropriate to approach the volatility in leading stocks from a perspective of phased buying."