The New York Stock Exchange saw gains for the second consecutive day as concerns over a Federal Reserve interest rate hike this month eased. With U.S. long-term Treasury yields falling and a rotation into technology stocks continuing, attention is focused on whether the domestic market will also open higher on September 4. However, fluctuations based on macroeconomic variables and sector-specific demand are expected ahead of the release of the U.S. employment report for August.
On September 3 (local time), the Dow Jones Industrial Average closed up 624.16 points (1.18%) at 53,686.11. The S&P 500 rose by 81.11 points (1.06%) to finish at 7,747.71, while the tech-heavy Nasdaq Composite gained 366.23 points (1.40%) to close at 26,584.06.
The U.S. stock market was buoyed by dovish comments from Federal Reserve Governor Christopher Waller, who indicated support for keeping interest rates steady this month if inflation continues to ease. Consequently, the probability of a rate hike in September dropped significantly to 50.4% from 63.2%, according to the CME FedWatch tool.
U.S. Treasury yields also declined, with the 10-year note falling 2 basis points to 4.77%, and the 30-year yield dropping 2 basis points to 5.25%. The dollar index decreased by about 0.6%, alleviating some of the pressure on the stock market from recent interest rate hikes.
However, rising international oil prices and inflationary pressures in the services sector remain concerns. Amid ongoing military tensions between the U.S. and Iran, West Texas Intermediate (WTI) crude oil rose by 0.32% to $91.30 per barrel. The U.S. services Purchasing Managers' Index (PMI) for August improved to 55.4, indicating growth, but the services price index also increased, suggesting inflationary concerns are not fully resolved.
Technology stocks showed strength, with Nvidia rising 1.8% after announcing its acquisition of AI platform Hugging Face for approximately $12.9 billion. Snowflake surged 16.6% on strong annual revenue forecasts, while Broadcom fell 2.7% due to fourth-quarter revenue projections that fell short of market expectations.
In the domestic market, the decline in U.S. interest rates, the strength of technology stocks, and the rise in KOSPI 200 futures are expected to contribute to a positive opening.
As of 8:48 a.m. on September 4, pre-market trading on NextTrade showed Samsung Electronics and SK Hynix each up 1.2%. Other major semiconductor and technology stocks, including SK Square (0.7%) and Samsung Electro-Mechanics (1.4%), are also trending upward.
Market analysts believe that the results of the U.S. employment report for August will be a key factor in determining the direction of the stock market. If employment continues to recover moderately without excessive wage growth, concerns over a Fed rate hike may ease, potentially improving the valuation and supply conditions of the stock market, which have been pressured by recent rate increases.
Han Ji-young, a researcher at Kiwoom Securities, stated, "The calming of the recent surge in U.S. 10-year yields following Waller's dovish remarks and the rotation into large tech stocks like Nvidia and Tesla will positively impact the domestic market. The ideal scenario would be for the U.S. August employment figures to show a moderate recovery without raising recession fears and with limited wage growth."
She added, "The domestic market is expected to open higher, supported by falling U.S. interest rates, strong U.S. stock performance, and rising KOSPI 200 futures, followed by sector rotations influenced by macroeconomic variables such as the U.S. employment report and movements in the yen. With the KOSPI's forward price-to-earnings ratio at 5.1, its valuation remains attractive, and the consensus for 12-month forward operating profit is projected to rise by about 3% after September, indicating that macroeconomic uncertainties will have a limited impact on stock prices."
* This article has been translated by AI.
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