[Good Morning Stock Market] US Stock Market Mixed Amid Higher-than-Expected CPI... Individual Stocks Lead the Market

January CPI Up 6.4% Year-on-Year
Exceeds Market Forecast of 6.2%
"Foreigners Expected to Heighten Caution"

[Asia Economy Reporter Lee Jung-yoon] The U.S. stock market closed mixed as the January Consumer Price Index (CPI) inflation rate exceeded market expectations.

On the 14th (local time), the Dow Jones Industrial Average fell 156.66 points (0.46%) from the previous trading day to close at 34,089.27, the large-cap S&P 500 index closed at 4,136.13, down 1.16 points (0.03%), and the tech-heavy Nasdaq index rose 68.36 points (0.57%) to close at 11,960.15.

With January CPI higher than expected, concerns about tightening by the U.S. Federal Reserve (Fed) increased. The January CPI rose 6.4% year-over-year, slightly down from the 6.5% increase in the previous month. Although it continued a seven-month consecutive slowdown trend, it exceeded the market forecast of 6.2%. Additionally, it rose 0.5% month-over-month, a larger increase than December's 0.1%.

[Image source=Reuters·Yonhap News]

Excluding the volatile energy and food prices, the January core CPI also rose 0.4% month-over-month, higher than the market expectation of 0.3%. Year-over-year, it increased 5.6%, also exceeding the forecast of 5.5%.

With U.S. inflation indicators coming out differently than expected, the possibility that the Fed will maintain higher benchmark interest rates for a longer period than the market hopes is increasing. Strong employment data also supports this outlook.

Statements from Fed officials have influenced this outlook. John Williams, President of the New York Federal Reserve Bank, said, "We must continue to achieve the 2% inflation target." Thomas Barkin, President of the Richmond Fed, explained, "Inflation is normalizing but slowly." Patrick Harker, President of the Philadelphia Fed, said, "It is not over yet," but predicted a pause in rate hikes this year, adding, "The end is near."

In the U.S. stock market, discretionary consumer goods, technology, and materials stocks rose, while real estate, financials, and consumer staples declined. Notably, Tesla rose 7.51% on news of George Soros's purchase. Nvidia, which was reported as a potential winner in the artificial intelligence (AI) competition, rose 5.43%.

On the 15th, the domestic stock market is expected to continue a stock-specific market. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Although the U.S. January CPI showed a seven-month consecutive slowdown, differentiated trends among detailed items and a gradual slowdown in inflation will likely increase foreign investors' caution. With upcoming releases of real economy indicators such as industrial production, retail sales, housing, and manufacturing indices, aggressive buying by foreign investors may be limited."

He added, "However, as global interest in AI-related companies grows recently, expectations for explosive expansion of the AI industry ecosystem have increased. Domestically, companies are likely to focus on expanding AI investments and producing results, especially maintaining interest in semiconductors, which are the foundation of AI learning." Researcher Kim predicted that the KOSPI would start with a rise of around 0.1% that day.

Han Ji-young, a researcher at Kiwoom Securities, explained that despite the U.S. January CPI exceeding expectations, the outlook for interest rate cuts within the year has not changed, which is noteworthy. Researcher Han said, "The notable point is that regardless of the timing of the rate hike pause and the final rate level, the expectation of a 0.25% rate cut by the end of the year has not retreated. Although the restructuring of the housing cost weight pushed up the CPI value, actual housing costs turned downward since the first quarter of last year, and there tends to be about a one-year lag before this is reflected in inflation."

He continued, "This means that until the CPI for February to April, the expanded weight effect of housing costs may limit downward pressure on inflation, but looking at the inflation path through the end of the year, the downward trend remains valid. Inflation events have been important because they are directly linked to the Fed's tightening path. From this perspective, market participants find the January CPI results burdensome but seem to have chosen not to fully revise the existing outlook for rate cuts within the year until the March Federal Open Market Committee (FOMC) meeting."

Researcher Han predicted that the domestic stock market would show limited movement as it digests mixed issues such as inflation slowdown and continued expectations for rate cuts within the year despite the January CPI results. He said, "The sharp rise in Tesla's stock price following its price increase announcement may improve investment sentiment for domestic secondary battery stocks, and stock price trends will vary by sector and theme depending on individual issues."

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