[Good Morning Market] U.S. Stocks Drop on Surging Treasury Yields... Volatility Likely to Continue

30-Year U.S. Treasury Yield Surpasses 5%
"Investor Appetite for Risk Assets Weakens"
Potential for a Shift with Nvidia's Earnings Release
Continued Volatility Expected in Domestic Market on the 20th

As U.S. Treasury yields surged, the U.S. stock market also closed lower. With additional concerns over foreign investor flows, the Korean stock market is expected to start the day with volatility on May 20.

On May 19 (local time) in the New York stock market, the Dow Jones Industrial Average closed at 49,363.88, down 322.24 points (0.65%) from the previous session. The S&P 500 Index ended at 7,353.61, down 49.44 points (0.67%), while the Nasdaq Composite closed at 25,870.71, falling 220.02 points (0.84%).

The main factor behind the decline in the U.S. stock market was the sharp rise in Treasury yields. The yield on the 10-year U.S. Treasury surpassed 4.5%, while the 30-year Treasury yield at one point rose to 5.197%. This is the highest level since the 2007 global financial crisis. Expectations for a rate hike by the U.S. Federal Reserve are also increasing. Kim Sukhwan, a researcher at Mirae Asset Securities, analyzed, "The sustained increase in U.S. Treasury yields has weakened investors' appetite for risk assets," adding, "Selling pressure is continuously increasing, especially for growth and technology stocks."

Despite the burden from higher interest rates, semiconductor stocks such as Micron (+2.5%) and SanDisk (+3.8%) managed to rebound. In addition, the scheduled earnings release from Nvidia after the market closes on May 20 (local time) could serve as a catalyst for changing the market sentiment. Han Ji-young, a researcher at Kiwoom Securities, commented, "Even if the results only meet expectations, it could partially offset macroeconomic concerns, so it is appropriate to reflect this in investment strategies."

The Korean stock market is also expected to experience significant volatility due to the impact of U.S. Treasury yields and the rebound in Micron. Han further explained, "Today, the domestic market will likely see a mix of upward and downward factors, such as the rise in U.S. interest rates and concerns over foreign investor flows versus the rebound in semiconductor stocks like Micron, and the inflow of technical buying after the sharp decline, resulting in continued market volatility."

The unprecedented level of net selling by foreign investors is seen as more of a profit-taking move. Han added, "With surging yields on the U.S. 10-year Treasury and a strengthening dollar, macroeconomic pressures have increased, prompting foreign investors to seek risk hedges," and continued, "In this context, the sharp rise in semiconductor stocks throughout the year led to concentrated buying, and now, after selling semiconductors, foreign investors are securing cash as part of a short-term tactical profit-taking strategy."

He also noted, "Whether Nvidia's earnings, scheduled for release tomorrow, can offset macroeconomic concerns, and whether the surge in the U.S. 10-year Treasury yield subsides, are likely to determine the direction of the stock market for the rest of this week."

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