The U.S. stock market opened higher with AI-related stocks and semiconductor stocks strong thanks to the solid U.S. economy, Micron (+14.13 percent) and Broadcom (+5.64 percent). Of course, Apple (-4.13 percent) fell sharply on negative news, limiting the index’s rise. In the second half of the market, the index’s volatility increased, with the dollar strengthening, the desire to make profits, and the number of gains reduced. (Dau +0.68 percent, Nasdaq +0.20 percent, S&P 500 +0.32 percent, Russell 2000 +1.14 percent, Philadelphia Semiconductor Index +2.29%)
- Variables: Solid U.S. economy, AI-related stocks, investor sentiment
The previous day, the Fed raised the U.S. GDP growth rate from 1.4 percent to 2.1 percent in 2024, which is expected to continue solid growth. It is estimated that the Fed raised its interest rate outlook after next year. In the meantime, the job market was solid, with the number of new unemployment claims reaching 21.0 million, and the Philadelphia Fed’s index improved from -5.0 to 3.2, and the manufacturing PMI improved from 51.8 to 52.5
On top of that, the conference board’s leading economic index was also announced as +0.1, making a turnaround for the first time since February 2022. However, while manufacturing and stock markets led the rise, the consumer expectation index has not yet recovered, which limited future gains. In addition, GDP growth is expected to slow down in the second and third quarters as rising debt and interest rates weigh on consumer spending. After all, the U.S. economy is solid, but concerns over the possibility of slowing consumption are still ongoing. The service industry PMI also slowed down on the day, and concerns are estimated to be high given the sluggish consumer confidence index and sluggish performance of low-end product sales companies
Meanwhile, as the economic indicators are solid, the stock market continues to rise amid a strong dollar and a rebound in interest rates on government bonds. Despite the decline in Apple (-4.13 percent), the strength of semiconductor stocks led the rise due to the influence of Micron (+14.13 percent) and Broadcom (+5.64 percent). As positive news about the AI industry focused on the surge in demand for AI and the news of its activation, related stocks showed strength, driving the index to rise
However, it is worth noting that the unusually high individual investor sentiment index has shrunk significantly. This is because individual investors, who have driven the rise in the U.S. stock market, are estimated to be burdened by the high index rise. In fact, after six months, expectations for a rise have fallen from around 50% to 43.2%, and the outlook for a decline has soared from around 21% to 27.2%. As a result, individual stock sales are continuously being digested, and the rising stock groups tend to shrink, so related sentiment should be continuously noted. Depending on the results, stock volatility is likely to increase
- Features: Apple down Vs. Micron rises on Broadcom
Micron (+14.13 percent) posted better-than-expected results thanks to surging demand for the AI industry and raised its outlook for the future. In particular, it is positive that the outlook for demand for HBMs is very optimistic, with the company announcing that HBMs have already been sold out in 2024 and that many of them are already on sale in 2025. When Broadcom (+5.64 percent) talked about revitalizing the AI industry at a meeting with investors, many investment companies including TD Cowen raised their investment opinions and target prices. The Philadelphia Semiconductor Index rose 2.29 percent as AI-related stocks such as Nvidia (+1.18 percent), Super Microcomputer (+8.38 percent), and Marvell Tech (+1.60 percent) as well as semiconductor-related stocks such as Intel (+0.52%) and Lamb Research (+3.53%).
Apple (-4.13 percent) fell due to the anti-monopoly issue that came after the closing of the previous day. Apple claimed that it was not true, but the U.S. Department of Justice sued the company over the ban, claiming that it used its dominance to block apps. In addition, a briefing on Wednesday on the same reason as the lawsuit related to Epic Games said Microsoft (+0.97 percent), Meta Platforms (+0.44 percent), Match Group (-0.89 percent) and X will file a joint lawsuit. The fact that Google, along with Alphabet (-0.63 percent), is facing the first investigation under the EU’s digital law also helped expand the company’s decline. The company is expected to impose hefty fines depending on the outcome. Microsoft has been boosted by the announcement of AI PCs.
Tesla (-1.62%) fell after Senator Warren announced that the Securities and Exchange Commission should investigate the independence of its board. Chinese electric carmaker Li Auto (-7.48%) plunged after it issued weak guidance for quarterly sales. Nio (-1.96%) and Xpeng (-2.84%) also fell. Pinduoduo (-7.47%), which had reported solid results, including a 123% year-over-year surge in sales on Wednesday, was up over 16% at one point, but returned the gains to end up 3.5% on news that sales costs nearly tripled year-over-year, and continued this downward trend today, plunging. Jindong.COM (-3.87%) and Alibaba (-0.47%) also fell.
Accenture (-9.31 percent) fell in the wake of its weaker-than-expected earnings report. Stalled sales in Europe and massive sales declines in finance and telecommunications are particularly burdensome. Darden Restaurant (-6.50 percent) fell after it cut its full-year sales forecast due to slowing demand from low-income consumers. Nike (+0.55%) is up 3 percent, beating sales in the U.S. and China after the market closed. FedEx (+1.87%) is up 10 percent due to its upward revision of its outlook for this year despite sluggish sales and the announcement of a $5 billion share buyback. Lululebon (+2.09%) is down 8 percent due to same-store sales and sluggish future outlook despite solid earnings reports.
- South Korean stock market-related figures
The MSCI South Korean stock exchange ETF rose 1.05%, while the MSCI Emerging Index ETF rose only 0.12%. The Philadelphia Semiconductor index rose 2.29%, and the Russell 2000 index rose 1.14%. The Dow Transportation Index rose 1.14%. Night futures were down 0.53%. The one-month NDF dollar/won exchange rate, which affects the dollar/won exchange rate, which closed at 1,322.40 won the previous day, was at 1,332
- FICC: Pound, BOE weaken against dollar as rate cuts are expected after monetary policy
Oil prices fell on the news that the U.S. submitted a U.N. resolution calling for a ceasefire on the war against Israel and Hamas in addition to the strong dollar. However, the decline was limited as expectations for an increase in demand based on the recovery of China’s economy and the solid U.S. economy increased. Of course, Ukraine’s attack on Russian oil refineries also limited the decline. European natural gas continued to fall on the news that demand would decline due to mild weather. U.S. natural gas also fell
The dollar strengthened against other exchange rates on the strength of economic indicators. The euro weakened against the dollar on the ECB’s economic report that Germany’s weak consumption and weak industrial demand would plunge the euro into a recession in the first quarter. The pound widened its weakness against the dollar after the BoE said it was “moving in the right direction” for the governor to begin cutting interest rates amid a rate freeze
Treasury yields fell due to the aftershocks of FOMC before the market opened, but turned upward when solid economic indicators related to employment, manufacturing and housing indicators were released. Afterwards, the impact was limited, and the change was limited after a slight upturn. The Swiss central bank’s cut in its benchmark interest rate was also a factor limiting the rise. In particular, the FOMC’s forecast that the U.S. economy will be solid, raising GDP growth from 1.4% to 2.1% the previous day, is also estimated to have affected the rise in interest rates.
Gold rose, reflecting the previous day’s FOMC, despite the strong dollar. Copper and non-ferrous metals rose in aluminum, tin, and zinc, while copper and nickel fell. In particular, aluminum was driven by increased expectations for increased demand in China. Agricultural products such as wheat and soybeans fell due to the strong dollar. However, increased expectations for increased demand in China limited the decline.02/26 U.S. stock market, profit-taking sales, closed mixed amid limited fluctuations
The U.S. stock market started the day after the announcement of Nvidia’s earnings (+0.36%) profit-taking. In particular, the burden is due to the fact that the sale process has been carried out, with the super microcomputer (-11.84%) plunging. However, as the interest rate on government bonds fell sharply due to Fed members’ remarks, the weakening of technology stocks was limited. Thanks to this, the market focused on the stocks in the sale and limited changes, and the market closed mixed (Dau +0.16%, Nasdaq -0.28%, S&P 500 +0.03%, Russell 2000 +0.14%, Philadelphia Semiconductor Index -1.12%)
- Variables: Reinforcement of profit-taking
If momentum stocks led the U.S. stock market with a strong rise due to Nvidia (+0.36%) the previous day, today’s overall desire for profit-taking increases, and most of the related stocks fall or shrink their gains. According to market research firm FactSet, 79% of companies based on the S&P 500 reported earnings, with operating profit up 75% year-on-year, operating profit up 3.2% year-on-year, and sales up 65% year-on-year. Although solid earnings announcements were made, the index hit an all-time high, with 12m Fwd PER reaching 20.4 times, significantly exceeding the 10-year average of 17.7 times, which is a burden of valuation.
In addition, there is a high desire to realize profits as some stocks have rebounded in a hurry. In particular, concerns over excessive rebound in related industries were highlighted when it was highlighted that Nvidia’s market capitalization increase (about $280 billion) was greater than the total market capitalization of AMD as well as Coca-Cola, BOA, and Chevron last Thursday. Of course, unlike at the time of the IT bubble, the AI-related stock group is currently strong based on performance, so the valuation burden is not greater than the IT bubble. Therefore, most investment companies predict that although a limited process of digesting sales may proceed, the flow will not be deep or long. Due to these factors, while the process of digesting momentum stocks, including AI-related stocks, is underway, compression of stocks is underway
Meanwhile, a sharp drop in government bond rates also limited the decline in technology stocks. Christopher Waller, director of the Fed, cut interest rates