U.S. stocks ended Tuesday little changed to slightly lower, as a continued pullback in semiconductor shares and a mixed batch of big-bank earnings kept investors cautious. The S&P 500 barely moved, while the Dow and the Nasdaq Composite posted modest declines. The main theme was uneven strength under the surface: Apple hit a record high and Microsoft gained, but chipmakers sold off after Broadcom CEO Hock Tan compared some of the money pouring into the sector to “casino gambling” on Monday.
What Moved Markets
The Dow Jones Industrial Average fell 175.72 points, or 0.34%, to close at 51,674.83. The S&P 500 slipped 1.79 points, or 0.02%, to finish at 7,805.45. The Nasdaq Composite lost 41.52 points, or 0.15%, to end at 27,204.38.
The biggest source of pressure was the chip sector. The PHLX semiconductor index fell for a fifth straight session and has now dropped more than 8% over that stretch, though it is still up over 70% for the year. Reports of technological progress at China’s memory chipmaker CXMT added to worries about rising competition. Weakness in AI-linked stocks created some unease, but gains in Apple, Microsoft and Meta helped cushion the broader indexes.
Big banks were the other focus as third-quarter earnings season picked up. Results were mixed, and analysts pointed to a flattening yield curve (when the gap between short-term and long-term interest rates narrows, which can squeeze bank profits) as a headwind for banks with large retail operations. Behind the scenes, investors are still weighing high oil prices, elevated bond yields and the U.S. conflict with Iran against hopes for a strong earnings season. Analysts expect S&P 500 third-quarter earnings to grow more than 30%, according to LSEG data, driven largely by AI-related companies. The S&P 500 is up about 14% this year, but the typical stock in the index is up less than 5%.
Notable Movers
Bumble (BMBL) jumped about 56% to a one-year high after the dating-app company agreed to go private in a $1.3 billion deal.
Johnson & Johnson (JNJ) dropped about 6.8% in midday trading, making it the biggest drag on the S&P 500, even though the company beat profit estimates. The S&P 500 healthcare sector closed lower.
Micron Technology (MU) fell about 4.6% in midday trading, leading the chip-sector decline. Applied Materials (AMAT) also fell sharply, while Broadcom (AVGO) rose.
Citigroup (C) dipped about 3.4% in midday trading despite beating profit estimates, while Goldman Sachs (GS) edged up about 0.5% after also topping forecasts. Wells Fargo (WFC) fell about 1.5% after its net interest income missed estimates, and JPMorgan Chase (JPM) swung between gains and losses after a rare profit miss.
Domino’s Pizza (DPZ) lost about 3.8% in midday trading after cutting its full-year sales outlook.
Looking Ahead
Investors will get a closer look at inflation and consumer spending this week, with September consumer prices, producer prices and retail sales all due. Those reports will be read closely for signs of how higher oil prices are feeding through to the economy and what they could mean for interest rates. Comments from Federal Reserve officials, along with more bank and corporate earnings, should also help set the tone. Watch whether chip stocks stabilize after their recent slide, since the sector has been a major driver of this year’s gains.