[Good Morning Stock Market] "US Stock Market Profit-Taking Pressure on KOSPI... Expected to Start Lower"

US Stock Market Closes Higher Amid Q2 Earnings Reports
Tesla Shows Weakness Despite Strong Results
"Expected to Start Under Downward Pressure Mainly on Growth Stocks"

On the 19th (local time), the U.S. stock market closed higher as investors monitored corporate earnings reports for the second quarter of this year. The Dow Jones Industrial Average rose 109.28 points (0.31%) to close at 35,061.21, while the large-cap-focused S&P 500 index gained 10.74 points (0.24%) to finish at 4,565.72. The tech-heavy Nasdaq Composite increased by 4.38 points (0.03%) to 14,358.02. The Dow recorded its eighth consecutive day of gains, marking its longest rally since September 2019. All three major indices reached their highest levels since April of last year.

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The market focused on second-quarter earnings announcements. Goldman Sachs reported net income below expectations but operating revenue exceeded forecasts. According to FactSet, 78% of companies that have reported quarterly earnings so far have posted net income above estimates. After the market closed, Netflix, Tesla, IBM, and United Airlines released their earnings. Tesla achieved its highest quarterly revenue ever but saw a decline in operating margin. Netflix posted net income above expectations but its revenue fell short of estimates.

U.S. Treasury yields declined amid expectations that inflationary pressures are easing and that the Federal Reserve's rate hikes will soon come to an end. Global inflation is also slowing; the Eurozone's June Consumer Price Index (CPI) rose 5.5% year-over-year, down from 6.1% in the previous month. The UK's June CPI also eased to 7.9% year-over-year from 8.7% in May.

However, the domestic stock market is expected to open lower on the 20th. Profit-taking intensified in the U.S. market, leading to selling pressure that erased gains. The Philadelphia Semiconductor Index fell 1.06%, causing technology stocks to decline as a result.

Seo Sang-young, Head of Media Content at Mirae Asset Securities, said, "Despite Tesla's solid earnings report after the U.S. market close, profit-taking led to a sideways movement, and Netflix declined due to weak revenue despite significantly exceeding profit expectations, which is a burden." He added, "This ultimately increases profit-taking desires among market participants. Considering this, the domestic market is expected to start with a decline of around 0.3%, followed by a process of digesting selling pressure." He also noted, "The Chinese government's announcement of opinions on private economic development and growth promotion shows a willingness to stimulate the economy, which is positive. The market direction is expected to be determined based on changes in the Chinese stock market following the stimulus announcement."

Han Ji-young, a researcher at Kiwoom Securities, said, "The domestic market closed the previous day with strength centered on the KOSDAQ due to continued demand concentration in secondary battery stocks and outflows from other sectors. Today, amid increased volatility in supply and demand caused by profit-taking pressure on secondary battery stocks and new buying interest, the market is expected to open under downward pressure mainly on growth stocks influenced by U.S. factors."

Han also stated, "From a sector perspective, despite Tesla's strong performance supported by increased deliveries in India, the news of deteriorating gross margin has led to declines in after-hours trading, which is expected to burden domestic secondary battery stocks. Additionally, Netflix's weak revenue and conservative guidance causing a sharp drop in after-hours trading may weaken the supply and demand conditions for related domestic growth stocks, so caution is advised."

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