'Money Black Hole' in US Stock Market... Powell: 'Economy is Surprisingly Strong'

US Stock Market 'Solo Run'

$150 Billion Inflow into ETFs Over 3 Months

Dow Jones Breaks 45,000 for the First Time

All Three Major New York Stock Indices Hit Record Highs

Powell: 'Everyone Envious of Us'

Strong Performance from AI and Software Companies

BlackRock: 'Increase US Stock Weight'

Concerns Over Employment Slowdown and Inflation Resurgence

The United States is absorbing global investment funds thanks to robust economic growth and strong corporate performance. Funds are flowing out of politically and economically unstable Europe, China, where growth is slowing, and India, and moving towards the US. Expectations that President-elect Donald Trump will implement deregulation policies after taking office in January next year are also contributing to the US stock market's solo run.

○ Surge in US ETF Inflows

According to US financial data information company Bravo Research on the 4th (local time), funds flowing into US exchange-traded funds (ETFs) and mutual funds over the past three months amounted to about $150 billion, the highest in three years since 2021. Bravo Research analyzed that this record is in line with the S&P 500 index rising 26% this year.

On this day, all three major indices of the New York Stock Exchange hit record highs. The Dow Jones index closed at 45,014.04, up 308.51 points (0.69%) from the previous session. This is the first time the Dow Jones has closed above the 45,000 mark. The S&P 500 index rose 36.61 points (0.61%) to 6,086.49, and the tech-heavy Nasdaq index rose 254.21 points (1.30%) to 19,735.12.

The influx of funds into the New York Stock Exchange is because global investors are optimistic about the US economic situation. According to the International Monetary Fund (IMF) forecast, the US growth rate this year is 2.8%. In contrast, the growth rate forecast for the Eurozone (20 countries using the euro) is only 0.8%.

US consumption is also strong. US retail sales in October this year increased by 0.4% from the previous month on a seasonally adjusted basis, totaling $718.9 billion. This exceeds the market forecast of a 0.3% increase. The retail sales growth rate for September was significantly revised from 0.4% to 0.8%.

Corporate performance is also showing strong results. Semiconductor design company Marvell Technology and customer relationship management software company Salesforce saw their stock prices surge on the day, thanks to third-quarter results that exceeded market expectations.

○ Powell: 'US Economy is Strong'

Jerome Powell, Chairman of the US Federal Reserve (Fed), is also optimistic about the US economic situation. At the 'DealBook Summit' event hosted by the New York Times on this day, he diagnosed that 'the US economy is in a surprisingly good situation.' He said, 'The labor market has also improved,' and 'other major economies envy us.' The Fed's economic activity report (Beige Book) released on this day also showed that US economic activity increased slightly over the past month. The Fed evaluated that 'expectations for growth have moderately increased across most regions and industries,' and 'consumer spending has generally stabilized.'

BlackRock Investment Institute, the research and analysis arm of the world's largest asset manager BlackRock, also issued an opinion to increase the weight of US stocks on this day. It judged that the increased use of artificial intelligence (AI) would bring a tailwind to various sectors. Bravo Research also saw that the New York Stock Exchange has more room to rise. The current situation is similar to 1996 when then-Fed Chairman Alan Greenspan warned of overheating, but it doubled over the next three and a half years.

○ Inflation Resurgence as a Variable

Some are concerned that inflation will resurge. In the Beige Book, some companies surveyed in areas under the jurisdiction of the Philadelphia Federal Reserve Bank and the St. Louis Federal Reserve expressed concerns that the new tariff policy announced by President-elect Trump would increase inflation risks.

Uncertainty is also detected in employment indicators. US employment information company Automatic Data Processing (ADP) announced on this day that private sector employment in the US increased by 146,000 from the previous month. This is below the expert forecast of 163,000 compiled by Dow Jones.

New York = Park Shin-young Correspondent nyusos@hankyung.com