[Good Morning Stock Market] US Stock Market Ends Mixed... KOSPI Expected to Start Down Around 0.3%

by Son Seonhee

Published 20 Apr.2023 08:28(KST)

Overnight, the U.S. stock market opened lower due to weak earnings from some technology stocks but narrowed losses during the session to close mixed. On the 20th, the KOSPI is expected to open slightly down by around 0.3%.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,897.01, down 79.62 points (0.23%) from the previous session. The Standard & Poor's (S&P) 500 index fell 0.35 points (0.01%) to 4,154.52, while the Nasdaq index rose 3.81 points (0.03%) to 12,157.23.

Shares of ASML, a Dutch semiconductor equipment manufacturer, fell over 3% despite earnings exceeding expectations, after news that first-quarter net bookings dropped 46% compared to last year. Intel’s stock also declined 2.14% following its announcement to halt production of the Blockscale series of Bitcoin mining chips. The Philadelphia Semiconductor Index fell 1.02%. IT services company CDW plunged sharply by 13.23% due to weak earnings, and Cisco also declined by 4.51%. Tesla’s shares were down over 4% in after-hours trading after news that profits fell 24% year-over-year due to price cuts.

With mixed earnings results mainly among technology stocks, the early session decline eased as the Federal Reserve’s (Fed) Beige Book report indicated an overall decrease in bank lending.

However, uncertainty remains high regarding the Fed’s actions after May, limiting any stock price rebound. The market expects the Fed to raise the benchmark interest rate by 0.25 percentage points at the upcoming Federal Open Market Committee (FOMC) meeting next month. Yet, there is significant uncertainty about whether the Fed will cut rates afterward.

[Image source=Yonhap News]

The KOSPI is expected to open slightly lower. Seo Sang-young, head of the Media Content Division at Mirae Asset Securities, said, "The U.S. stock market initially opened lower following earnings announcements from some technology stocks but narrowed losses with the Nasdaq turning positive, which is likely to have a positive impact on the Korean stock market." However, he added, "The weakness in ASML despite better-than-expected earnings and the decline in the Philadelphia Semiconductor Index are burdensome." He continued, "Furthermore, Tesla’s 4% drop in after-hours trading following its earnings announcement is noteworthy because it could affect investor sentiment in the secondary battery sector, which has recently been leading the market but is experiencing increased volatility due to clashes between profit-taking and buying demand."