[Good Morning Market] Higher Likelihood of Lower Open on Nasdaq Weakness and Profit-Taking

AMD Weak Despite Earnings Surprise
"Providing an Incentive for Profit-Taking in Semiconductor Stocks"

On the 4th, the Korean stock market is expected to open lower, as weakness in the Nasdaq, led by software stocks, coincides with profit-taking following the recent short-term surge.

The U.S. stock market closed lower, mainly driven by declines in tech stocks. On the previous trading day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 166.67 points (0.34%) from the previous close to end at 49,240.99. The S&P 500 Index lost 58.63 points (0.84%) to close at 6,917.81, while the Nasdaq Composite Index finished at 23,255.19, down 336.92 points (1.43%).

On this day, concerns over a U.S. government shutdown eased as the House of Representatives passed a budget bill, but renewed worries over the profitability of artificial intelligence (AI) software companies weighed on investor sentiment. After Anthropic released an AI automation tool, expectations of intensified competition emerged, triggering broad-based profit-taking in AI software firms. Major names such as Intuit (-10.9%), ServiceNow (-7%), and Microsoft (-2.9%) all weakened together, leading the overall decline in technology stocks.

In addition, concerns about profitability pressures for hardware companies due to the sharp rise in memory prices also came into play, expanding volatility across AI-related stocks excluding semiconductors. Market participants assess that, even within the AI industry, the divergence in share prices between sectors with high earnings visibility and those without is likely to continue for the time being.

At the dealing room of Hana Bank's head office in Jung-gu, Seoul, on the 3rd, an employee is monitoring the stock market and exchange rates as the KOSPI, a day after plunging, surged more than 4%, triggering a buy-sidecar (temporary suspension of program buy orders). The KOSPI opened at 5,114.81 that day, up 165.14 points (3.34%) from the previous session. 2026.2.3 Photo by Cho Yongjun

This U.S. market trend is expected to act as a headwind for the Korean stock market as well. The previous day, the domestic market rose sharply, supported by the easing of panic selling triggered by Kevin Warsh’s remarks, bargain hunting after the prior day’s plunge, and a surge in semiconductor stocks driven by expectations of further increases in memory prices. On this day, however, analysts expect the indices to open lower as weakness in the U.S. tech sector combines with profit-taking after the short-term rally. Although AMD reported an earnings surprise after the close, its share price was down around 7% in after-hours trading due to heightened expectations, which is also expected to encourage profit-taking in Korean semiconductor stocks.

Securities firms noted that the current Korean market is being driven by earnings momentum centered on semiconductors and by momentum-chasing purchases from individual investors, which are partly fueled by FOMO (fear of missing out). As a result, they expect large-scale individual liquidity to concentrate in leading semiconductor stocks and index-type exchange-traded funds (ETFs).

Han Jiyeong and Lee Sunghoon, researchers at Kiwoom Securities, said, "However, with concerns over the speed of the index still remaining, the KOSPI’s record-high volatility over the past two trading days could lead to a short-term price correction," adding, "Even so, strategies to increase exposure to leading sectors such as semiconductors, securities, and defense, and to buy on dips, remain valid."

They added, "From a short-term trading perspective, increasing exposure to sectors such as shareholder-return plays or foreign inbound consumption plays could also be an alternative." Examples include distribution, banking, cosmetics, and insurance sectors, where foreigners have been continuing net purchases.