[Good Morning Stock Market] 'Economic Concerns' US Stock Market Plummets... "KOSPI, Worries Over Foreigners' Exit"

New York Stock Market's 3 Major Indexes All Fall Over 1%
Day After 'Interest Rate Cut' Mention, Recession Concerns
"KOSPI May Accelerate Foreign Capital Outflow"

The joy of the pivot (monetary policy shift) lasted only one day. The New York stock market in the United States fell across the board due to concerns about an economic recession. Concerns about the potential outflow of foreign capital from the domestic stock market were raised.

[Image source=UPI Yonhap News]

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 40,347.97, down 494.82 points (1.21%) from the previous session. The S&P 500 index fell 75.62 points (1.37%) to 5,446.68, and the Nasdaq index closed at 17,194.15, down 405.25 points (2.30%) from the previous session.

The U.S. stock market, which had surged after Federal Reserve (Fed) Chair Jerome Powell hinted at the possibility of a "rate cut in September" the day before, cooled sharply the next day. This was due to a series of indicators showing the U.S. economy is deteriorating. Initial jobless claims reached 249,000, the highest in about a year. The Institute for Supply Management (ISM) June Services Purchasing Managers' Index (PMI) recorded 46.8, down from 48.8 the previous month. This is the lowest level since November last year (46.6). A PMI below 50 indicates economic contraction.

Among the "Magnificent 7 (M7, Apple, Microsoft, Google Alphabet, Amazon, Nvidia, Meta, Tesla)," all stocks except Meta declined. Meta rose 4.83%. Meta reported an earnings surprise (better-than-expected results) after the previous trading session. In contrast, Tesla (-6.55%), Nvidia (-6.67%), Alphabet (-0.40%), Microsoft (-0.30%), Apple (-1.68%), and Amazon (-1.56%) all closed lower. Semiconductor stocks, including Nvidia, had a nightmare day. AMD (-8.26%), Qualcomm (-9.37%), and Micron (-7.57%) were swept up in heavy selling, and Intel, which reported second-quarter earnings below expectations, fell 5.5% during regular trading and plunged nearly 20% in after-hours trading.

There are complaints in the market that the Fed should have cut the benchmark interest rate more quickly. Chris Rupkey, chief economist at U.S. financial research firm FWD Bonds, said, "There is a possibility of three rate cuts this year, but the winds of recession are strong," adding, "The stock market doesn't know whether to laugh or cry." Tom Fitzpatrick, managing director at futures brokerage RJ O'Brien & Associates, said, "There is a worrying signal that the Fed has been wavering for too long."

On the 1st, the KOSPI closed at 2,777.68, up 6.99 points (0.25%) from the previous trading day. Foreign buying was strong on expectations of a U.S. rate cut. The rise in secondary battery and battery-related stocks such as Samsung SDI, POSCO Holdings, and LG Energy Solution stood out for the first time in a while.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The data (economic indicators) from the U.S. raised concerns in the market that a recession could spread while the Fed maintains the current policy rate," adding, "The increased downside pressure on the U.S. economy is likely to accelerate the outflow of foreign capital from the domestic stock market."

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