US Benchmark Interest Rate Raised by 25bp, New York Stock Market Closes Lower

The U.S. government is strongly demanding domestic production, and there are concerns that it may take measures such as imposing tariffs if this is not met.

Furthermore, various difficulties exist, such as issues with reviewing overseas leakage of national core technologies, the cost of constructing local factories, and the burden of high labor costs, necessitating a cautious approach.

Intel has a history of losing to Japanese companies in competition. At that time, Andy Grove and Gordon Moore decided to withdraw from the memory business and focus on CPUs, specifically X86 processors.

This strategic choice became the foundation for Intel's growth into a global semiconductor company. Intel's re-entry into the memory business later symbolizes a new challenge, overcoming past failures.

This improvement in performance is positively impacting the semiconductor industry as a whole.

However, strike controversies are erupting in some companies, and demands for performance-based bonuses are continuing at major semiconductor companies like Samsung Electronics and SK Hynix, spreading debate over the justification for union activities. Analysis suggests this situation is leading to skeptical changes in previously progressive union perspectives.

Some point out that excessive bonus payments at certain companies are causing relative deprivation among employees of other companies, spreading like a strike epidemic. Among those working in AI-related industries, the perception of 'Aren't we also AI?' is spreading, leading to louder calls for fair compensation for their performance.

While an interest rate hike itself is a negative for the market, the prevailing view is that it's not an immediate concern. The market is expected to hold up to some extent until the fourth quarter of this year.

However, the full-scale after-effects of the interest rate hike are likely to appear next year. This analysis suggests that the current rate hike will affect the economy as a whole with a time lag.

Therefore, it is crucial to anticipate and prepare for next year's economic situation, and this year's market is expected to be a period of enduring while anticipating the after-effects.

Due to interest rate hikes, the view is spreading on Wall Street that the appropriate P/E (price-to-earnings) ratio should be lowered. Major institutions such as Wells Fargo and Yardeni Research have downgraded their year-end targets.

The interesting point is that despite an upward revision in corporate earnings forecasts, the target index was lowered. This is interpreted as a reflection of the impact of rising interest rates on stock market valuations, separate from actual corporate earnings.

Ultimately, this suggests that the stock market is not merely an arithmetic area that is proportional to corporate earnings, but rather an area that complexly reflects macroeconomic variables such as interest rate changes.

Foreign investors hold a large volume of shares compared to the low point, so there is a constant possibility of additional selling. This means that foreign capital outflow may continue.

Therefore, the key lies in how much the futures supply and demand and institutional investors, especially financial investment (Kumtu) volume, can defend the market. If foreign investor supply and demand are absent, program non-arbitrage selling may intensify, raising concerns about increased market volatility.

This shows that a different market environment and investor sentiment are at play compared to the past.

In this situation, it is emphasized that a trading strategy of preemptively securing key stocks in specific themes and responding to them is important. In other words, focusing on the fundamentals of individual stocks and market momentum rather than the interest rate hike itself is analyzed to be effective.

Therefore, a cautious approach is required when trading.

Experts advise maintaining a holding strategy when stock prices rise, but immediately taking profits when prices start to fall. Realizing profits quickly rather than holding on for too long can be a wise strategy.

This suggests that the Fed believes further action is needed to curb inflation.

Therefore, it is believed that the inflation problem has not yet been resolved, reinforcing the outlook that additional interest rate hikes within the year will be inevitable. The market is expected to pay close attention to the Fed's resolve and reflect the possibility of further rate hikes.

Rising oil prices exacerbate inflationary pressures and strengthen the trend of interest rate hikes.

This suggests that a more conservative approach to risky assets is needed than before. Analysis indicates that an environment unfavorable to risky assets such as stocks is being created as the possibility of a rapid interest rate hike cycle increases.

Comparing the single interest rate hike cycle in March 1997 to the current situation, analysis suggests that a market adjustment of about 5-10% may occur when tightening begins. This is the perspective of experts who attach importance to past cases.

While such an adjustment period can be perceived as a risk, the outlook is that stock prices have ample possibility to rise again after this period. Especially because new growth engines like the artificial intelligence (AI) revolution exist, long-term upside potential remains valid.

Therefore, while short-term adjustments are inevitable, there is great anticipation that stock prices will trend upward thereafter, driven by technological innovation.

This reflects the perception that the interest rate hike itself has been factored into the market, thereby increasing predictability.

However, it warns that U.S. Treasury yields entering the 5% range could have a gravitational effect on asset markets. High Treasury yields can relatively reduce the attractiveness of risky assets like stocks, affecting capital flows.

Historically, when Earnings Per Share (EPS) increased by 10-20% annually, stock market valuations tended to be maintained even with 10-year Treasury yields at the 5% level. Statistical data shows that when EPS increased by more than 20%, high valuations were maintained even with interest rates above 6%.

Current market expectations anticipate EPS growth of approximately 20% next year, suggesting there is room to wait for U.S. stock market valuations until the benchmark interest rate approaches 6%. This indicates that solid corporate earnings growth can support the stock market even in a high-interest rate environment.

According to Reuters, reports indicate that SK Hynix is considering ways to utilize some of the remaining or currently unused space at Intel's Ohio fab. It is highly likely that these discussions are about memory utilization, not foundry.

This is interpreted as part of the global semiconductor rivalry and a response to pressure for expansion in the U.S. It can also be seen as evidence that demand for memory semiconductors remains strong.

If SK Hynix utilizes Intel's fab, front-end equipment stocks are likely to benefit.

This launch will carry a total of 15 satellites, including 5 ultra-small cluster satellites and 10 CubeSats, which is the largest number of satellites Nuriho has ever transported.

Additionally, SpaceX's next-generation launch vehicle is scheduled to conduct an orbital launch test on September 22, which is likely to act as a factor stimulating short-term stock prices of space-related companies.

During periods of interest rate hikes, bond prices fall, but it can be an attractive opportunity for investors considering new entry. Inquiries about bonds, especially U.S. Treasury bonds, have significantly increased among wealthy investors.

U.S. Treasury bonds offer a non-taxable benefit on capital gains, making them even more attractive. Experts recommend a strategy of staggered purchases over 4-5 times from now, keeping the interest rate ceiling open.

This is considered an effective investment strategy to pursue stable returns in a high-interest rate environment and to expect capital gains when interest rates fall in the future.

Analysis suggests that profitability is secured for the short term of 1-2 years, especially for power infrastructure companies.

However, stock prices have already risen significantly, and high valuations (multiples) can be a disadvantage. This high valuation should be considered when investing.

The nuclear power market is characterized by a long period from design to completion. Initial fixed costs are incurred, but high profit structures can be expected after completion.

There are ETFs related to both large-scale nuclear power plants and Small Modular Reactors (SMRs), increasing investor accessibility. These stocks tend to have large fluctuations when they move, so caution is needed when investing.

While U.S. companies face regulatory risks and high cost burdens, domestic companies, performing foundry functions focused on manufacturing, are evaluated as having relatively lower risks.

Short-term benefits can be expected due to news flow, which acts as a factor increasing the relative attractiveness of domestic nuclear power companies compared to U.S. companies.

This implies that using a general account may be more advantageous than investing in a pension account.

Pension accounts are generally suitable for foreign ETFs and it is advisable to utilize their tax deferral benefits. Including domestic theme-based ETFs in a pension account may be a strategic mistake.

Particularly, foreign ETFs such as AI power core infrastructure should be invested in by actively utilizing the tax deferral benefits of pension accounts for effectiveness.

Even with a confirmed interest rate hike, it's not a situation where stock allocation must be reduced unconditionally. This is because the U.S. economy is maintaining a strong state.

Therefore, a strategy focused on blue-chip stocks or index-based products with high cash holdings and solid performance is effective. Overly investing in small and medium-sized stocks should be avoided.

It is important to approach the market from a staggered buying perspective to diversify risk and to respond flexibly while closely monitoring economic conditions.