[Good Morning Market] U.S. Stocks Weaken Amid Ceasefire Deadlock... Volatility Expected in Korea Too

Mounting Short-Term Fatigue

Despite the strength of semiconductor stocks, all three major U.S. stock indices ended lower due to the impact of localized clashes between the United States and Iran. The domestic stock market is also expected to show volatility, affected by the correction in the U.S. market and exchange rate pressures.

On June 3 (local time), the Dow Jones Industrial Average closed at 50,687.07, down 620.72 points (1.21%) from the previous session. The S&P 500 Index ended at 7,553.68, down 56.10 points (0.74%), while the tech-heavy Nasdaq Composite fell 239.93 points (0.89%) to close at 26,853.98.

There are mounting signs of short-term fatigue in the U.S. market. Over the past two trading days, negative domestic and overseas news has prompted market participants to react more sensitively to adverse developments. First, mutual attacks on military bases by the United States and Iran have delayed ceasefire negotiations. In addition, renewed concerns in the previously quiet U.S. private credit market—triggered by news of a 17% redemption at Clearwater and a capital increase by Alphabet—have added further pressure on the stock market.

The KOSPI index started higher and surpassed the 8800 level for the first time ever on June 1, 2026. The electronic board showing the status of the domestic stock market is displayed in the dealing room at the headquarters of Hana Bank in Jung-gu, Seoul. Photo by Kang Jinhyung

Although Broadcom reported strong earnings after the U.S. market closed the previous day, its sales guidance for the next quarter (USD 16 billion) fell short of market expectations (USD 17.2 billion), leading to a 10% plunge in its share price during after-hours trading and further undermining investor sentiment in semiconductor stocks.

During the Korean market holiday, the Philadelphia Semiconductor Index surged by more than 7%, and expectations are high for Nvidia CEO Jensen Huang's visit to Korea. However, overall correction in the U.S. market, external uncertainties, and renewed pressure from the won-dollar exchange rate returning to the 1,530 won level are expected to drive volatility in the domestic market.

This high volatility is likely to persist for some time. Han Ji-young, a researcher at Kiwoom Securities, commented, "Since May, intraday swings in the KOSPI have become more pronounced, significantly increasing market participants' fatigue. While the Jensen Huang narrative may subside after his visit on June 5, the concentration of investment in leading semiconductor stocks is expected to continue, making high volatility inevitable in the near term." She explained that this is because the profit momentum centered on semiconductors and the continued low valuation burden remain the foundation of the current bull market.

However, Han noted that a recurring pattern of narrowing losses toward the market close suggests solid support for leading stocks in this environment. Therefore, she advised building a portfolio centered on leading stocks such as semiconductors, as well as lagging sectors like securities, retail, and defense, and sectors with excessive declines such as bio. She also added that the timing for entering the market should be spread broadly throughout the trading session, rather than focusing solely on the opening or closing prices.

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