[Good Morning Market] U.S. Stocks Close Lower, Led by AI Shares... Korean Market Seen Volatile This Week

U.S. stocks fall on CoreWeave concerns; S&P 500, Nasdaq and Dow decline
Renewed concerns over the AI industry point to volatile trading in South Korea
Power equipment and defense earnings due this week; non-semiconductor stocks in focus

U.S. stocks closed lower, led by AI shares, amid concerns over the debt burden of cloud computing company CoreWeave. Domestic stocks are expected to see volatile trading this week.

Yonhap News Agency

On Oct. 16 (local time), the S&P 500 fell 1.09% (84.63 points) to close at 7,659.44 on the New York Stock Exchange (NYSE). The Nasdaq Composite, which is heavily weighted toward technology stocks, lost 2.15% (572.99 points) to 26,140.03, while the Dow Jones Industrial Average fell 0.34% (175.28 points) to 52,002.41. The Philadelphia Semiconductor Index ended the session down 3.83% (443.93 points) at 11,137.29.

Investor sentiment appears to have weakened as concerns grew over disruptions to crude oil supplies from the Middle East and Russia, with West Texas Intermediate (WTI) and Brent crude each topping $100 and $110 per barrel, respectively.

Concerns about financing for AI infrastructure stocks flared up again as corporate bond yields and credit default swap (CDS) premiums surged at CoreWeave (-11.9%). AI stocks also closed lower, including Micron (-5.6%), Nvidia (-1.4%) and Meta (-3.7%).

Domestic stocks are expected to remain volatile this week as a steep decline in U.S. AI stocks reignites concerns about the AI industry. "Whether CoreWeave's share price rebounds, and whether the surge in corporate bond yields and CDS premiums subsides, are the first things to watch, as CoreWeave recently served as the trigger for market jitters," said Han Jiyoung, an analyst at Kiwoom Securities. "However, the financial structures of neocloud companies and large hyperscalers differ, so it remains to be seen whether credit concerns stemming from CoreWeave will lead to a broad pullback in AI investment."

Han added, "In this respect, third-quarter earnings from U.S. big tech companies, including Meta, Tesla and Lam Research, will be an important test of whether they can restore market confidence in AI." She also noted that key points in the upcoming earnings reports include whether AI-driven improvements in advertising efficiency are translating into revenue growth at Meta; whether growing demand for power at AI data centers is improving the profitability of Tesla's energy storage system (ESS) business; and how Lam Research's outlook for semiconductor capital expenditures and equipment demand next year has changed.

Earnings reports are also scheduled this week from domestic power equipment and defense companies, including Hyundai Rotem on Oct. 19 and LS ELECTRIC on Oct. 21, suggesting diverging share price movements between semiconductor and non-semiconductor sectors. "We expect the market to build downside support as it moves through earnings events for U.S. big tech companies and key domestic firms in areas such as power equipment and defense," Han said. "It is also worth considering that, in terms of the extent of share price declines, domestic stocks have already undergone a more excessive correction than other markets."

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