[Good Morning Stock Market] Fed 'Hawkish' Remarks... KOSPI Expected to Start Down 0.3%

[Asia Economy Reporter Son Sunhee] The U.S. stock market closed lower across the board, influenced by Google's sharp decline and remarks from Federal Reserve (Fed) officials. The KOSPI is also expected to start down about 0.3% on the 9th.

On the 8th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,949.01, down 207.68 points (0.61%) from the previous session. The Standard & Poor's (S&P) 500 index fell 46.14 points (1.11%) to 4,117.86, and the Nasdaq index dropped 203.27 points (1.68%) to 11,910.52.

Google launched its language model-based artificial intelligence (AI) 'Bard (BARD)' earlier this week. However, after Wall Street released materials highlighting Bard's inaccurate responses, Google's stock price plunged 7.7% that day. There were also opinions suggesting Bard would be at a disadvantage in competition with Microsoft's ChatGPT.

Consecutive remarks from Fed officials also drew investors' attention. On the previous day, Fed Chair Jerome Powell commented on employment data, saying, "If the indicators are stronger than expected, we may need to raise interest rates more," which heightened market tension.

At a Wall Street Journal event that day, John Williams, President of the New York Federal Reserve Bank, said, "It will be necessary to maintain a restrictive stance for several years to bring inflation down to the 2% target." However, regarding a '0.25 percentage point' rate hike, he described it as "an appropriate size for policy adjustment" and evaluated the December dot plot (which shows the Federal Open Market Committee members' interest rate projections) that projected a range of 5.00?5.25% as "a very reasonable view." This implies that to reach the median value, two more rate hikes must be implemented from the current level (4.5?4.75%).

Fed Governor Christopher Waller also added at a conference that "inflation remains very high, so more action is needed," and "we are preparing for a longer fight to bring inflation down to the target." However, despite the hawkish views from Fed officials, there was little impact on the dollar and Treasury yields.

The domestic stock market is expected to start down about 0.3%. Kim Seokhwan, a researcher at Mirae Asset Securities, explained, "Differentiated movements due to individual company issues are expected to be prominent. However, since it is an options expiration day, volatility may occur due to intraday index and individual stock derivatives trading."

This content was produced with the assistance of AI translation services.