US Stock Market Flash: 10/3 – An 'Abnormal Situation' of Soaring Interest Rates Despite Worsening Employment! The Truth Behind Winning Stocks and Capital Outflow

🚨 [Emergency Analysis] Interest rates keep rising despite worsening employment! The true nature of the ‘abnormal situation’ shaking the market

An unusual and distorted market environment is spreading in the US market.

Normally, the theory is: ‘Weak economic indicators (slowing employment) → Increased expectations for Fed rate cuts → Lower interest rates and higher stock prices.’ However, in the recent market, an ‘abnormal situation’ has occurred where interest rates, which fell temporarily immediately after the indicator announcement, immediately turned to a sharp rise, and US Treasury bonds were sold off heavily.

A sense of economic slowdown (rapid cooling of employment)

Inflationary pressure that shows no signs of subsiding

As the sense of caution regarding so-called stagflation, where these two factors tighten the market simultaneously, gradually spreads, the ‘era where you could win just by buying the index’ has completely ended.

Furthermore, capital is being rapidly withdrawn from the US and Europe, which are facing fiscal instability and geopolitical risks, and global funds are beginning to shift to the ‘Asian market (Japan, South Korea, Taiwan),’ which has low manufacturing costs and controls the AI supply chain. Whether or not you can see through this structural change will be a major turning point for your future asset formation.

📈 [Major Indices] Nasdaq resisting high interest rates! Latest chart diagnosis for the Dow and S&P 500

Even in the face of the intense headwind of rising interest rates, the three major indices showed resilience and pushed back. However, there is a significant temperature difference in the internal structure of the indices.

🔹 Dow Jones Industrial Average

Closing price: $51,167 (+$243.00 / +0.47%)

Price range: $390 (Low $50,960 – High $51,350)

Chart analysis: Although it was bought following the employment statistics, it turned to a sharp decline due to the subsequent surge in interest rates. From there, it managed to recover. It remains within a downtrend framework, and it is necessary to anticipate a development where it will test the 200-day moving average or the psychological milestone of $50,000 once.

🔹 S&P 500

Closing price: 7,721 (+55.08 points / +0.72%)

Price range: 50 points (Low 7,700 – High 7,750)

Chart analysis: It absorbed the shock of the bond sell-off and maintained positive territory without sinking into the negative. The price range is contracting and a sense of stagnation is emerging, entering a battle just before a major breakout in either direction.

🔹 NASDAQ

Closing price: 27,166 (+295.21 points / +1.10%)

Price range: 230 points (Low 27,120 – High 27,350)

Chart Analysis: It has broken above the trend line and boasts overwhelming strength among the three major indices. The concentration of ‘strong stocks that are not sold even when interest rates rise’ is powerfully pushing up the entire index.

Note: While the small-cap Russell 2000 also rose by 1.0%, high-dividend stock ETFs (-0.1%) and high-yield bonds faced a harsh movement with their upside capped.

💡 [Individual Stocks & Sectors] Clear Winners and Losers! ‘Stocks That Beat Inflation’ vs. ‘Stocks That Fall Behind’

Instead of the entire market being bought, a game of musical chairs is accelerating where capital is concentrated only in ‘carefully selected winning stocks’.

🔥 ‘Winning’ Stocks and Sectors That Were Bought

AI & Advanced Semiconductors (Strongest Inflation Resistance)

• NVIDIA: Up 1.5% and hovering near record highs! The move by Morgan Stanley to upgrade its rating to ‘Overweight’ and raise the target price to $300 (currently around $234) also provided a tailwind.

• Other Semiconductor & AI Server Related: AMD (+3%), Dell (+4%), Oracle (+3%), TSMC, and semiconductor manufacturing equipment stocks were all high. Furthermore, Hewlett Packard Enterprise (HPE) surged by 7%.

• Synaptics: A fabless semiconductor company specializing in Human-Machine Interfaces (HMI). It exploded 13% higher on news such as a potential acquisition by On Holding (On Holding also rose 5%).

Tesla

Surged 5.6%! The market appreciated the solid recent sales figures (delivery results), which led the rise in tech stocks.

Construction & Infrastructure Related

Caterpillar (+2.5%), Deere, and United Rentals (+3.9%). Demand for AI data center construction is tremendous, and these stocks are being bought with the support of real infrastructure demand.

Space & Security

SpaceX (+7%) and Rocket Lab, among other space stocks that had been sold off, are showing signs of bottoming out. CrowdStrike and others are also showing continued strength day after day.

❄️ ‘Losing’ Stocks and Overreacted Stocks That Were Sold

Although it cleared EPS expectations ($0.48) in its earnings report, revenue growth was down 4%. It is struggling significantly, especially in the Chinese market, where it saw a 22% decline. With customers being taken by emerging competitor brands like On and HOKA, there are concerns about competitive failure and prolonged stagnation.

Following reports that Toshiba (Kioxia-related) would invest $380 million in the Philippines to double hard disk supply, concerns about worsening supply and demand caused Seagate (-10.3%) and Western Digital (-10.0%) to plummet. Micron (-2.1%) and SanDisk (-3.7%) also fell in sympathy due to association selling. However, since the decline occurred at a stage where the factory has not even broken ground, it may hold the potential to be an excellent dip-buying opportunity if viewed calmly.

📊 【Macroeconomics & Interest Rates】 Shock-level September Jobs Report and Surging US Treasury Yields

Let’s accurately grasp the figures of the macro indicators that are throwing the market into confusion.

📄 Shocking Data from the September Jobs Report

• Non-farm payrolls: +29,000 (a stall significantly below the expected 85,000)

• Past revisions: The previous month (133,000) was revised downward by 29,000, and it has been revised downward for three consecutive months. The reality of the labor market is cooling down more than it appears.

• Unemployment rate: 4.2% (0.1% worse than the previous month, a figure worse than the expected 4.1%)

• Average hourly earnings: +3.0% year-on-year and +0.1% month-on-month, with the pace of increase clearly slowing down.

💣 Abnormal Surge in Interest Rates and Bonds

Despite the worsening employment, bond selling accelerated and yields surged.

• 2-year Treasury yield: 4.83% (+0.05%)

• 10-year Treasury yield: 5.29% (+0.06%)

• 30-year Treasury yield: 5.64% (+0.04%)

Interest rates, centered on long-term rates, remain high or are rising, and with the midterm elections approaching, the probability of the Fed raising rates in October has retreated to 17%.

💵 Currency, Commodities, and Other Indicators

• Dollar-Yen: Around 157.82 yen (slightly toward a stronger yen)

• Crude oil: WTI crude oil $91 / Brent crude oil $102 (high energy prices confirm the persistence of inflation)

• Crypto assets: Bitcoin fluctuated wildly around $84,164 (approx. 13.28 million yen) due to the impact of sharp interest rate fluctuations.

• Gold: While rising interest rates are a burden, it is caught in a tug-of-war as a hedge against inflation.

• VIX index: Remains at a historically low level of 15.

🌍 【Geopolitics & Global Capital Outflow】 Reasons for Capital Flowing from the US and Europe to ‘Asia (Japanese Stocks)’

Right now, a dramatic shift is occurring in the capital allocation of global investors.

Manifestation of European Risk

In addition to fiscal risks in France, geopolitical risks are rising (including unsettling trends suggesting Russian influence on the Baltic states and Poland, and warning statements from the Polish Prime Minister). Major financial institutions (such as Mitsubishi UFJ) are also recommending ‘selling the Euro and buying the Yen,’ intensifying caution toward the European market.

The Cost Limits of US Dominance

Concerns are beginning to emerge that labor and infrastructure costs are too high to conduct semiconductor and high-tech manufacturing within the United States.

Capital Inflow to Asia (Japan, South Korea, Taiwan)

Capital seeking to avoid the double risk of the US and Europe is heading toward the Asian market, where manufacturing costs are overwhelmingly lower and which serves as the core of the AI supply chain.

As a result, Nikkei 225 futures jumped to around 68,309 yen in overnight trading, recording a fierce surge of approximately 1,300 yen.

📝 [Summary] Investment Strategy to Survive This Crazy Market and Capture All the Profits

The message delivered by the US market this time is extremely simple.

‘In a market where economic slowdown (worsening employment) and rising interest rates coexist, even index investing, which buys the entire market, is not a panacea.’

The key points for surviving from here on out can be summarized in the following three items.

‘Extreme concentration’ on stocks that can beat inflation

Narrowing down to ‘chosen stocks’ such as advanced AI semiconductors like Nvidia and TSMC that can grow earnings even with high interest rates, construction and equipment stocks that monopolize infrastructure demand, and Tesla, which has demonstrated overwhelming product power.

Buying the dip on overreacted high-potential stocks

Memory and storage-related stocks like Seagate and Micron, which were sold off solely due to speculation from investment news, can become excellent buying opportunities once you assess their earnings and actual performance.

Riding the wave of the shift to Asian and Japanese stocks

Do not fixate solely on US stocks; incorporate the strong upward trend of Japanese stocks and Asian semiconductor stocks, which are serving as recipients of global capital, into your portfolio.

Let us remain calm and identify where capital is fleeing from and where it is heading, without being swayed by the superficial noise of the market!

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