[Good Morning Market] New York Stock Exchange Falls on Solid Economic Indicators... KOSPI Expected to Open Flat

The New York Stock Exchange declined as optimism over a potential interest rate cut weakened due to strong U.S. second-quarter gross domestic product (GDP) and other key economic indicators. On September 26, the domestic stock market is expected to open flat.

Reuters Yonhap News

On September 25 (local time), the Dow Jones Industrial Average closed at 45,947.32, down 173.96 points (0.38%) from the previous trading day. The S&P 500 Index fell by 33.25 points (0.5%) to 6,604.72, and the Nasdaq Index dropped by 113.157 points (0.5%) to 22,384.698.

The U.S. Bureau of Economic Analysis (BEA) under the Department of Commerce announced that the final figure for real GDP in the second quarter increased at an annualized rate of 3.8% compared to the previous quarter. This figure exceeds last month's preliminary estimate of 3.3% by 0.5 percentage points and marks the highest quarterly growth since the third quarter of 2023, when it was 4.7%.

The labor market also remained solid. According to the Department of Labor, initial jobless claims for the week of September 14 to 20 stood at 218,000, a decrease of 14,000 from the previous week’s 232,000. This figure was also below the market expectation of 233,000, alleviating some concerns about a slowdown in the labor market.

Such strong economic indicators acted as a negative factor for the stock market. This is because expectations for an interest rate cut have diminished. Korea Investment & Securities analyzed, "A revaluation of the artificial intelligence (AI) sector is ongoing," and added, "With the release of stronger-than-expected economic indicators, concerns have arisen that the Federal Reserve may slow the pace of interest rate cuts, leading the New York Stock Exchange to decline for the third consecutive day."

The Korean stock market is also expected to face challenging conditions. This is due to the upcoming Chuseok holiday and a lack of momentum. Lee Sunghoon, a researcher at Kiwoom Securities, stated, "The domestic stock market is in a consolidation phase due to the absence of significant issues ahead of the long Chuseok holiday and the third-quarter earnings season," and predicted, "On September 26, the domestic stock market is expected to start flat as risk appetite is somewhat dampened by the adjustment in expectations for interest rate cuts and the won-dollar exchange rate approaching the 1,410 won level."

However, net purchases of Samsung Electronics by foreign investors are expected to serve as a factor supporting the downside. He said, "The continued net buying trend of large-cap stocks, especially Samsung Electronics, by foreign investors is expected to support the downside of the domestic stock market."