U.S. stocks end mixed on solid economy and slower inflation despite Intel plunge

The U.S. stock market rose as inflation continued to slow down based on the PCE price index, but the semiconductor industry expanded its fall in the wake of Intel’s (-11.91%) plunge after the earnings announcement, triggering a slump in the index. However, the index’s decline was limited due to the strength of some individual stock groups with high performance expectations. Furthermore, expectations for the U.S. economy are still positively affected by investor sentiment. In the end, the market ended mixed with the Nasdaq and others weakened due to the decline in the semiconductor industry, but the Dow rose (Dow +0.16%; Nasdaq -0.36%, S&P 500 -0.07%; Russell 2000 +0.12%; Philadelphia Semiconductor Index -2.91%)

• Variables: Inflation slows, earnings concerns and expectations

The PCE price index, which the Fed is paying attention to in December, rose 0.2% from a 0.1% month-on-month drop released last month and remained 2.6% year-on-year. In particular, durable goods have been in negative territory since May last year, while the service sector is still high, rising 0.3% month-on-month. Of course, these service sectors also rose 3.9% year-on-year, slowing down continuously, eventually falling below 4%. Meanwhile, the core PCE price index, excluding food and energy, also rose 0.2% month-on-month from 0.1% to 2.9%, the lowest since February 2021. In general, the trend of slowing inflation has expanded

However, while personal income increased 0.3% month-on-month, consumer spending expanded from 0.4% to 0.7% month-on-month. In particular, consumption of durable goods such as TVs and other home appliances rose 1.1% month-on-month during the year-end shopping season, leading to a sharp increase in consumption. Furthermore, consumption of non-durable goods also showed solidity, shifting from a 0.6% decrease month-on-month to a 0.8% increase. As a result, despite slowing inflation, the dollar’s weakness declined and interest rates rose based on the solidity of the U.S. economy, including consumption. Of course, changes are limited due to the conflict between rising and falling factors. The stock market is also reacting to corporate issues rather than related news, and the semiconductor industry is clearly weakened

Meanwhile, market research firm FactSet estimates that six of the M7 stocks, excluding Tesla, which has already reported earnings, saw their profits rise 53.7% year-on-year in the fourth quarter. And the rest of the S&P 500 stocks are estimated to have fallen 10.5% year-on-year. That’s why market participants are paying more attention to the performance of large technology stocks, which is expected to inevitably increase index volatility.

• Features: Semiconductor industry slumps

Intel (-11.91 percent) plunged when it issued weak guidance despite solid earnings. Of course, the possibility of continued decline is limited as it is due to sluggish pace for competition in the AI industry rather than the slump in key sectors. However, the company has been burdened by the fact that it has stimulated the desire for profit-taking due to the surge, while Nvidia (-0.95 percent), AMD (-1.71 percent), Broadcom (-2.04%), AMAT (-3.32 percent), and RAM Research (-3.07%) have been sluggish. As a result, the Philadelphia Semiconductor Index fell 2.91 percent. However, ASML (-0.15 percent) and TSMC (+0.60 percent) remained strong, and the plunge in the semiconductor industry caused by Intel’s plunge can be seen as an excessive reflection of market participants

The U.S. Express (+7.10 percent) surged after the company announced better-than-expected guidance and dividend hikes despite weaker-than-expected earnings. On the other hand, its rival Visa (-1.71%) fell on the announcement that growth in U.S. payments slowed in January despite the better-than-expected earnings report. Capital One (+4.66%) fell in early trading on the report, but the loss was due to provisions and rose as the possibility of solid earnings in the future was highlighted.

Comcast (+2.19%) rose for the second consecutive day following a strong performance the previous day. Retail retail businesses such as Walmart (+0.88%), Costco (+1.03%), and Target (+0.25%) rose on the back of solid consumer spending. UnitedHealth (+1.99%) and CVS Health (+1.40%), which plunged after Humana (+1.65%) reported a surprise loss the previous day, were strong due to backlash. Airbnb (+5.28%) rose as it announced plans to charge a new service fee. Boeing (+1.78%) rose on the news that major airlines resumed flying Boeing 737 Max 9 after inspection

• South Korean stocks: Solid flow outlook

The MSCI Korea Index ETF rose 1.02 percent, but the MSCI Emerging Index ETF rose only 0.08 percent. The Russell 2000 index rose 0.12 percent, the Dow Transportation Index fell 0.32 percent, and the Philadelphia Semiconductor Index fell 2.91 percent. Night futures are expected to rise 0.61 percent, with South Korean stocks expected to open around 0.3 percent higher. The one-month NDF dollar/won exchange rate is expected to start at 1,335 won, considering that it is expected to fall 2 won

South Korean stocks were sluggish on Friday in the wake of Intel’s slump in the semiconductor sector, but rose more than 1 percent at one point on the back of a strong secondary battery sector that plunged the previous day. However, the gains were narrowed by a slump in the semiconductor sector. Meanwhile, the KOSDAQ rose 1.64 percent on the back of a strong secondary battery sector. Meanwhile, the Nasdaq fell on the back of weak semiconductor sectors, weighing on the Korean stock market. However, the impact was limited given that related issues were partially reflected on Friday. Rather, the Korean stock market is expected to rise in light of slowing inflation and solid consumer spending. Of course, the positive effects of China’s aggressive stimulus measures are also favorable. Considering this, the Korean stock market is expected to remain solid after starting the rise of around 0.3 percent

• FICC: Short-term Treasury yields rise

International oil prices rose as friction over the Red Sea continued. Furthermore, U.S. consumer spending was solid, and expectations for a consumption increase due to China’s continued economic stimulus policy were also positive. However, the rise was limited due to some of the process of digesting sales following the recent surge. U.S. natural gas jumped around 5% due to the inflow of reversals following the recent plunge.

Gold fell in the wake of rising interest rates. Nonferrous metals were mixed, selling mainly on some items, leaving gains from China’s stimulus measures behind. In particular, a series of stimulus measures also weighed on the inflow of reversals, including a fall in Chinese stocks on Friday. Wheat rose the previous day on news that U.S. supply would fall slightly and then fell on inflows of reversals. Soybean and other crops were also sluggish

Treasury bond rates also fell as inflation continued to slow, with the PCE price index recording 2.6% year-on-year and the core PCE price index recording 2.9% year-on-year. However, the fact that consumer spending is still solid and weakened the Fed’s expectations for a rate cut is an upward factor. Along with this, the wait-and-see attitude is strong, waiting for the Treasury Department’s plan to issue government bonds and FOMC

The dollar weakened against other exchange rates due to the continued slowdown in U.S. inflation through the PCE price index. However, the weakness was reduced due to the fact that consumer spending is solid and there will be no clear cut in the FOMC. The weakening of the yen against the dollar as the inflation rate in Japan slowed was another factor in the reduction of the dollar’s weakness.

1/29 Global Financial Market Trends

◆ the U.S. stock market

• – DOW: 38,109.43p (+60.30p, +0.16%)
• – S&P500: 4,890.97p (-3.19p, -0.07%)
• – NASDAQ: 15,455.36p (-55.14p, -0.36%)
• Russell 2000: 1,978.33p (+2.45p, +0.12%)

◆ Related to Korea

• MSCI Korea Index ETF: $59.50 (+0.60, +1.02%)
• MSCI Emerging Index ETF: $38.89 (+0.03, +0.08%)
• – Eurex kospi 200: 337.20p (+2.05p, +0.61%)
• NDF exchange rate (1 month): KRW 1,335.02 / Expected to start 2 won lower than the previous day
• PHILADELPHIA SEMICONDUCTOR: 4,342.10 (-130.15, -2.91%)

◆ the foreign exchange market

• Dollar Index: 103.433 (-0.141, -0.14%)
• Euro/dollar: 1.0852 (+0.0006, +0.06%)
• Dollar/yen: 148.15 (+0.49, -0.33%)
• Pound/dollar: 1.2703 (-0.0005, -0.04%)

◆ the U.S. government bond market

• 2-year: 4.3489% (+5.6 bp)
• 5-year: 4.0366% (+3.8 bp)
• 10-year: 4.1373% (+1.9 bp)
• 30-year: 4.3688% (-0.2bp)
• 10Y-2Y: -21.16bp (3.68bp reverse magnification)
  (Gift for government bonds)
• – 2YR T-Notes: 10218 (-003 1/2, -0.11%)
• – 5YR T-Notes: 10720 3/4 (-006 1/4, -0.18%)
• – 10YR T-Notes: 11101 (-009 , -0.25%)
• – US T-Bonds: 11918 (-008 , -0.21%)
• – Ultra US T-Bonds: 12515 (-006 , -0.15%)

◆ Commodity Market ($, sweet grain, copper cent)

• – WTI: 78.01 (+0.65, +0.84%)
• Brent crude: 83.55 (+1.12, +1.36%)
• Gold: 2,036.10 (-0.70, -0.03%)
• Silver: 22.87 (-0.05, 0.24%)
• Zinc (LME, 3M): 2,577.50 (-2.50, -0.10%)
• Copper: 385.20 (-1.70, -0.44%)
• Corn: 446.25 (-5.50, -1.22%)
• Wheat: 600.25 (-12.00, -1.96%)
• Soybean: 1,209.25 (-13.75, -1.12%)