Nasdaq slips, S&P halts two-day win streak as ASML, Nvidia weigh on chip stocks
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Wall Street retreated on Tuesday, as chip stocks took it on the chin following disappointing earnings from Dutch giant ASML (ASML) and news that the U.S. was mulling further export caps.
Market participants also parsed through quarterly results from several high-profile companies.
Meanwhile, U.S. Treasury yields slid as traders moved to the safety of bonds. Oil prices extended their decline to a second day after a report that Israel will not strike Iran’s oil assets.
The tech-heavy Nasdaq Composite (COMP:IND) led losses among the three major averages, last -0.85% at 18,346.19 points in midday trade. The benchmark S&P 500 (SP500) was -0.39% at 5,837.58 points, while the blue-chip Dow (DJI) was -0.28% at 42,946.69 points.
The S&P (SP500) halted a two-day gain which saw it post its 45th and 46th record close for the year. With the U.S. bull market now two years old, the question among market participants is how far can this run?
“This cyclical bull market was born exactly two years ago on October 13th, 2022, and fitting with that milestone the major averages notched another all-time high last week. The question, of course, is how many more innings are left in this cycle. The median bull market lasts 30 months and produces a 90% gain, so by that measure we are in the 7th inning or so,” Fidelity’s Jurrien Timmer said on X (formerly Twitter).
Declines in the energy and technology sectors were the main drivers of Tuesday’s negative session. Energy fell in tandem with oil. WTI crude oil futures (CL1:COM) were -5.3% and Brent crude futures (CO1:COM) were -4.8% after the Washington Post said Israeli Prime Minister Benjamin Netanyahu had told the Biden administration that he was willing to strike military rather than oil or nuclear facilities in Iran.
Technology was under pressure as U.S.-listed shares of ASML (ASML) plunged. The Dutch computer chip equipment supplier’s Q3 bookings of €2.6B missed expectations. While top boss Christophe Fouquet noted continued “strong developments and upside potential in” artificial intelligence (AI), he also warned of a “more gradual than previously expected” recovery in other market segments.
ASML’s (ASML) announcement further clouded sentiment in the chip space, following a Bloomberg News report on Thursday that said U.S. government officials were in talks to cap sales of advanced AI chips from Nvidia (NVDA) and other firms on a country-specific basis. Nvidia (NVDA) was -5.3% on Tuesday.
UnitedHealth (UNH) -7.0%, was another significant drag on markets. The health insurer sparked concerns among investors about medical costs after reporting an uptick in its medical care ratio – the percentage of premiums spent on medical care. The results weighed on other managed care players such as Centene (CNC) -4.4%, and Elevance Health (ELV) -3.9%.
In other earnings-related moves, pharmaceutical giant Johnson & Johnson (JNJ) +1.6%, after surpassing top- and bottom-line estimates. Bank of America (BAC) +1.8%, after a strong asset management business performance helped the number two U.S. lender by assets deliver a quarterly beat.
Looking at the fixed-income markets, Treasury yields fell as bonds were snapped up. The benchmark 10-year yield (US10Y) was down 6 basis points to 4.05%, while the shorter-end 2-year yield (US2Y) was down 2 basis points to 3.95%.
See live data on how Treasury yields are doing across the curve on the Seeking Alpha bond page.