US Stocks Consolidate Despite Falling Interest Rates and Oil Prices Amid Semiconductor Sector Sell-off

Major U.S. stock indices have failed to sustain their recent uptrend, showing a pattern of consolidation or slight corrections from their highs. The Nasdaq Composite, in particular, briefly surpassed 30,000 points but then fell back, transitioning into an overall consolidation phase.

Manager Lee Ga-ram stated, "The Nasdaq Composite had gone above 30,000 points again, but then came back down, and it's now consolidating after its previous climb." He added that other major indices like the Dow Jones, S&P 500, and Russell 2000 showed similar trends.

Recently, both interest rates and oil prices closed lower after hitting new highs. Typically, declines in interest rates and oil prices are positive for the stock market, but this time, an unusual situation occurred where the stock market fell despite rates and oil stabilizing.

Manager Lee Ga-ram pointed out, "Oil prices also looked like they were going up, but they ended up with an inverted hammer candlestick. Interest rates didn't rise, and oil prices didn't rise, so why did the stock market fall? That's what's important here." He analyzed that the decline in indices despite stable commodity prices is emerging as a major market concern.

The primary reason for the stock market's decline is attributed to concentrated profit-taking in the semiconductor sector. Strong selling pressure on semiconductor-related stocks, which had shown the highest rebound recently, drove down the indices.

Manager Lee Ga-ram explained, "The sector that fell the most was semiconductors, and it seems that selling came from the area that showed the most rebound recently." This is interpreted as a phenomenon occurring during the market's overall rotation process. The fact that the number of declining stocks exceeded the number of rising stocks also reflects overall market weakness.

The U.S. 30-year Treasury yield surged to 5.3%, emerging as a new source of market unease. This, coupled with the sharp rise in the semiconductor index, strengthens the analysis that high interest rates ultimately triggered profit-taking.

Manager Lee Ga-ram stated, "The problem is that the 30-year yield has now climbed to 5.3%, leading to questions like, since the semiconductor index has also risen a lot, perhaps high interest rates ultimately acted as profit-taking pressure?" He suggested that declining demand for Treasury bonds due to increasing U.S. debt is contributing to upward pressure on long-term yields.

The slower-than-expected decline in oil prices is causing persistent anxiety in the market about a potential rise in August inflation. This is reigniting concerns about unyielding price increases, acting as a downward pressure on the stock market.

Manager Lee Ga-ram said, "Ultimately, there's anxiety that prices might rise again in August. There's concern that since oil prices aren't falling easily, prices might go up again." He also raised the possibility that former President Donald Trump's comments regarding Iran negotiations may have influenced this market anxiety.

Recently, major tech companies like Meta and BlackRock have issued large volumes of corporate bonds at high interest rates, around 7%, leading to a noticeable absorption of market liquidity into the bond market. This is creating a de facto tightening effect despite nominal interest rates remaining stable, putting a burden on the stock market.

As corporate funding needs grow, the volume of corporate bond issuance increases, causing funds that would otherwise flow into the market to become tied up in bonds. High-yield corporate bonds, in particular, act as an attractive alternative for investors, diverting funds away from the stock market.

Manager Lee Ga-ram emphasized, "Big Tech's funding needs are also growing, so corporate bond issuances—like those by Meta and BlackRock at around 7% interest—are continuously absorbing market funds."

In conclusion, despite the prevailing trend of frozen benchmark interest rates, the increase in corporate bond issuance is effectively absorbing market liquidity, creating a market environment similar to indirect monetary tightening. This is likely to act as a factor limiting further gains in the stock market.