Market Wrap | Earnings Shock Sends Nasdaq Tumbling as Semiconductor Stocks Falter
On Tuesday, October 15, U.S. stocks closed lower across the board, with the S&P 500 dropping 0.76% to 5,815.26 points, the Dow Jones Industrial Average falling 0.75% to 42,740.42 points, and the Nasdaq Composite declining 1.01% to 18,315.59 points. The downturn in semiconductor stocks, heavily influenced by disappointing earnings from ASML, weighed heavily on the technology sector, contributing to a more than 1% fall in the Nasdaq.
ASML’s earnings shock exacerbated the decline, with reports indicating its quarterly orders were almost half of what had been anticipated, leading to a pullback in semiconductor stocks. This warning added pressure on the market, dragging the Philadelphia Semiconductor Index down by 5.3%. NVIDIA and AMD saw significant losses, with NVIDIA experiencing its worst day since September 6, plummeting nearly 6.8%, while AMD fell around 4.9%.
Financial results from major corporations provided mixed signals. United Health outperformed expectations in both earnings and revenue, whereas American banks, including Citigroup, demonstrated better-than-expected financial results. However, Citigroup experienced pressure, attributed to a disappointing net interest income figure.
The oil segment observed a sharp decline in prices, continuing a downtrend due to geopolitical factors. Reports surfaced that Israel has no intention of targeting Iranian oil facilities, alleviating some of the pressure on oil markets. Consequently, energy stocks faced heavy losses, with major players like Exxon Mobil and Chevron falling over 3% amid the oil price plunge.
Meanwhile, economic data revealed a surprising contraction in New York’s manufacturing activity, with the Empire State Manufacturing Index dropping significantly to -11.9. This report showcased contrasting economic realities, where some households thrive from stock market gains, yet others face challenges with rising debt and limited investment exposure.
Market figures show energy and semiconductor ETFs dropping over 3% and 5% respectively, contrasting with defensive sectors such as real estate which posted gains. On the commodities front, expectations of a supply glut coupled with reduced demand growth projections influenced a slump in oil prices, while gold enjoyed gains due to a drop in U.S. bond yields, fueled by weaker economic indicators.
Geopolitical developments and Fed commentary continue to present potential volatility. Fed officials have emphasized the need for vigilance as inflation moderates. Collectively, these factors created multifaceted pressure points for investors, leading to cautious movements and varied sector performances as global financial narratives evolve.