[Good Morning Stock Market] Stock Trends Expected Ahead of US CPI Announcement

Mixed Trends in US Stock Market, AI Stocks Rising
"CPI and Consumer Sentiment Index to Guide Market Direction"

On the 9th, the domestic stock market is expected to show limited movement ahead of the U.S. April Consumer Price Index (CPI) announcement. As caution seeps in, a sector-by-sector market is anticipated depending on corporate earnings reports.

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Sangyoung Seo, Researcher at Mirae Asset Securities: “CPI Caution and Debt Ceiling Negotiations Lead to a Wait-and-See Stance”

The U.S. stock market showed mixed trends the previous day ahead of the CPI announcement and a meeting between party leaders regarding debt ceiling negotiations. The Dow Jones Industrial Average fell by 0.17%, while the Nasdaq and S&P 500 rose by 0.18% and 0.05%, respectively.

Additionally, the Federal Reserve (Fed) announced through a report on U.S. bank lending practices that banks have tightened lending standards, which led the market to express concerns about a recession and negative investor sentiment toward risk assets. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, stated, “Credit tightening has begun, and a recession is possible; this must be absolutely considered when setting monetary policy.”

The market exhibited sector-specific trends. Amid the ongoing U.S.-China technology war surrounding artificial intelligence (AI), optimism about the AI industry continued, with AMD (5.79%), GitLab (9.02%), Alphabet (2.08%), and Nvidia (1.64%) showing strong performance.

Considering these factors, the domestic stock market on this day is expected to lack a clear direction due to concerns about economic slowdown, the outcome of debt ceiling negotiations, and CPI caution. In particular, the CPI results may come out higher than expected due to a rebound in gasoline prices, making it necessary to confirm the results. On a stock-by-stock basis, differentiated movements are expected, focusing on each company’s earnings and U.S. AI-related stocks.

Namjung Moon, Researcher at Daishin Securities: “The Sell in May Jinx Will Be Broken”

The old adage that stocks should be sold in May is unlikely to hold this year. This is because the three variables that caused caution?the U.S. May FOMC, April employment data release, and Apple’s earnings report?have been confirmed, significantly reducing uncertainty. The FOMC raised interest rates by 25 basis points (1bp = 0.01 percentage points), but it confirmed that the timing for pausing rate hikes is near. Employment data showed unexpectedly strong results, lowering concerns about a hard landing for the U.S. economy, and strong earnings from big tech companies including Apple are expected to raise corporate earnings expectations. Indeed, the U.S. stock market saw the S&P 500 rise by 1.85%, the Nasdaq by 2.25%, and the Dow Jones by 1.65%.

Key upcoming events include the May CPI index (on the 10th) and the May University of Michigan Consumer Sentiment Index (on the 12th). If a slowdown in inflation and improvement in consumer sentiment are confirmed, expectations for a rate freeze at the June FOMC will increase, and concerns about a hard landing for the U.S. economy in the second half of the year are likely to subside. The expected figures for the U.S. April CPI and core CPI are 5% and 5.5% year-over-year, respectively, which are not significantly different from the previous month, but if the focus is on the slowing trend, the market could interpret this positively.

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