On November 2, the domestic stock market is expected to experience increased volatility. Following disappointing earnings reports from major U.S. tech companies Alphabet, Amazon, and Intel, concerns about the profitability of artificial intelligence (AI) investments have intensified, leading to a sharp decline in the New York stock market.
As of 8 a.m. on November 2, Samsung Electronics shares were trading at 215,500 won, down 4.44%. At the same time, SK Hynix fell 4.23%, while Samsung Electro-Mechanics dropped 6.29%, SK Square decreased by 5.8%, LG Energy Solution was down 2.5%, and Hyundai Motor fell 3.19%, indicating a general downturn across most stocks.
This decline is largely attributed to the significant drop in the New York stock market on October 30, where all three major indices fell amid a sell-off in AI and semiconductor stocks.
On the New York Stock Exchange, the Dow Jones Industrial Average fell by 1.09%, the S&P 500 dropped by 1.82%, and the tech-heavy Nasdaq Composite plummeted by 2.86%.
Following Alphabet's disappointing results, Amazon and Intel also reported earnings and forecasts that fell short of market expectations, leading to skepticism on Wall Street about whether investments in AI infrastructure will translate into tangible profits and productivity gains.
Intel's stock plummeted by 28.58%, marking its worst day since the 1970s, while the Philadelphia Semiconductor Index dropped by 7.20%.
Other major tech stocks also saw significant declines, including Nvidia (-4.22%), Micron (-5.30%), AMD (-10.88%), and SK Hynix American Depositary Receipts (ADRs) (-7.95%).
This week is packed with major events that could further increase market volatility. The midterm elections on November 3 are expected to result in significant losses for President Donald Trump and the Republican Party, with predictions that both the House and Senate could shift to Democratic control.
If the Democrats sweep both chambers in a 'blue wave,' it is anticipated that regulations related to the AI industry will expand, potentially slowing the pace of growth in the AI sector and impacting semiconductor demand. However, market analysts believe that AI-related regulations are a secondary concern and not the primary variable affecting the market.
Seo Sang-young, an executive at Mirae Asset Securities, stated, "This week, the results of the U.S. midterm elections, along with employment data and Treasury bond issuance plans affecting long-term interest rates, as well as the performance and investment efficiency of major AI semiconductor companies, are expected to determine market direction. The market's adjustment is seen as a reassessment of whether companies can bear the substantial investment costs and how quickly they can convert these into profits. Particularly, the stability of interest rates and AI-related credit spreads will be crucial indicators for the sustainability of any rebound in tech stocks."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.