New York stocks slip on China's semiconductor rise
US stocks closed lower across all three major indexes on Monday (local time). Competition concerns over artificial intelligence (AI)-related stocks intensified after China's semiconductor maker ChangXin Memory Technologies (CXMT) announced plans to launch new products. Major US banks reported third-quarter net profits higher than a year earlier, but the strong results failed to lift their share prices, with bank stocks also declining.
On the New York Stock Exchange, the Dow Jones Industrial Average closed at 51,670.10, down 0.35% from the previous session. The S&P 500 fell 0.02% to 7,805.45, and the Nasdaq Composite ended at 27,204.38, down 0.15%. The Dow had risen more than 460 points intraday before reversing into negative territory.
It was a mixed picture for banks that had raised the bar on expectations. All four major banks—JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup—posted higher year-on-year net profits, yet their shares all fell. Citigroup, which beat market expectations, plunged 5.6%, while Wells Fargo, whose net interest income fell short of forecasts, dropped 3.1%. JPMorgan, which missed market estimates, lost 0.9%, and even Goldman Sachs, which posted strong results, slipped 0.2%.
A closer look at the earnings revealed mixed results. Goldman Sachs posted third-quarter net income of $5.29 billion, up roughly 29% from a year earlier, with earnings per share (EPS) of $17.01 and revenue of $18.68 billion, beating market forecasts. JPMorgan earned net income of $15.31 billion, but its EPS of $5.57 fell short of the market estimate of $5.90.
Tech stocks were weighed down by China-driven competition concerns. CXMT said it plans to roll out higher-performance new products by the end of the year, raising worries about the competitiveness and profitability of US memory chipmakers. Micron Technology fell 3.6% on the news, while semiconductor equipment maker Applied Materials dropped nearly 7%. The Philadelphia Semiconductor Index slipped 0.23%, extending its losing streak to five sessions.
What prevented further market declines was the Federal Reserve's rate outlook. New York Fed President John Williams said in a Bloomberg interview that one more rate hike this year could be appropriate, but there is no basis for further increases next year. Fed Governor Christopher Waller, speaking at the Bloomberg New Economy Forum in New Delhi, India, also said rising long-term Treasury yields are curbing demand in rate-sensitive sectors such as housing and autos, doing part of the work of monetary tightening.
