[Good Morning Market] U.S. Stocks Rise but Semiconductors Weaken... Korea Expected to Pause

U.S. Markets Rise Across the Board, but Capital Flows to Tech Stocks
Semiconductor Stocks Weaken; SK hynix ADR Drops 9%
After Sharp Rally, Korean Market Expected to Pause
Focus on TSMC's Earnings Announcement This Afternoon

The U.S. stock market closed higher after the June Producer Price Index (PPI) came in below market expectations. As the likelihood of a Federal Reserve (Fed) rate hike has decreased, there appears to be a shift in investment from semiconductor stocks to major technology stocks. Following a sharp rise the previous day, South Korea’s KOSPI, which had surged, is expected to enter a period of consolidation as profit-taking emerges due to the weakness in U.S. semiconductor stocks.

On July 15 (local time), the Dow Jones Industrial Average on the New York Stock Exchange closed at 52,658.64, up 0.29% from the previous session. The S&P 500 index rose 0.38% to 7,572.40, while the tech-heavy Nasdaq Composite Index closed at 26,269.23, up 0.62%.

Easing inflationary pressures boosted investor sentiment. According to the U.S. Department of Labor, the June PPI fell 0.3% from the previous month. The market had expected it to remain flat, but it declined for the first time month-on-month since August last year. The decline was also the largest drop since April last year. The year-over-year increase slowed to 5.5% from 6.0% in May. This was interpreted as being influenced by a 6.4% drop in energy prices. The producer price index, also called wholesale prices, is seen as a leading indicator for consumer prices, as it is reflected in final consumer goods prices with a certain lag.

Bloomberg reported that this PPI result reflects the stabilization of energy prices during the U.S.-Iran ceasefire period. The market interpreted that even if tensions in the Middle East rise again, the Fed now has room to keep interest rates unchanged for the time being. According to the CME FedWatch Tool, the probability of a Fed rate hike this month in the federal funds futures market has dropped to the low 10% range. The probability of a rate hike in September also fell from the mid-50% range to the high 40% range.

Corporate earnings also supported the rise in the indexes. The world’s largest asset manager, BlackRock, beat market expectations with its second-quarter earnings, which sent its stock up 6.6%. PayPal, which reportedly received an acquisition proposal, surged 17.2%. Apple also climbed 3.97%, with buying momentum flowing into major technology stocks.

However, the semiconductor sector, which has a significant impact on the domestic stock market, performed poorly. The Philadelphia Semiconductor Index fell 2.08% to 12,398.89. Micron Technology plunged 7.94%, while Marvell Technology, Intel, and AMD dropped 7.27%, 4.43%, and 3.46%, respectively. Valuation burdens and profit-taking movements were seen, particularly in memory and artificial intelligence (AI) semiconductor stocks, which had risen sharply recently. SK hynix ADR also fell 9.00% due to heightened concerns over delays in data center construction.

The domestic stock market is expected to start slightly weaker and show divergent trends by sector. After a sharp surge the previous day, U.S. semiconductor stocks fell, and the MSCI Korea ETF, which is closely tied to the Korean stock market, also declined by 3.02%.

Market attention is expected to shift to TSMC’s second-quarter earnings, which will be announced at 3 p.m. KST today. If market expectations are met in terms of AI semiconductor demand, advanced process utilization rates, and capital spending plans, the shaken investment sentiment in semiconductors could recover. Conversely, if the stock price remains sluggish despite strong earnings, domestic semiconductor stocks may continue to experience high volatility for the time being. Sangyoung Seo, a researcher at Mirae Asset Securities, explained, "Volatility in semiconductors is likely to continue," adding, "Attention should be paid to TSMC's earnings."

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