US stocks held steady in another session of becalmed trading on Tuesday, as weakness in chipmakers continued and traders sorted through generally robust results from JPMorgan Chase & Co., Goldman Sachs Group Inc. and other lenders in the start to third-quarter corporate earnings season.
The S&P 500 Index closed little changed in New York and remains near a fresh all-time high. Meanwhile, chip stocks lost ground on worries over competition from a Chinese firm, with the Nasdaq 100 Index falling 0.3%.
"Not only have chip stocks taken a battering for a second day, as fears about the rising cost of borrowing have combined with concerns about the huge amount of cash being spent on AI infrastructure, but big US banks have failed to set pulses racing," said Danni Hewson, head of financial analysis at AJ Bell.
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China's CXMT is narrowing the technology gap with Samsung Electronics Co. Ltd., SK Hynix Inc. and Micron Technology Inc. - the world's biggest memory chipmakers - raising the prospect of greater competition that could erode the three DRAM giants' pricing power and market share. Micron shares fell along with hard-disk drive component makers such as Seagate Technology Holdings Plc and Western Digital Corp.
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For now, however, traders appear largely sanguine. The S&P 500 Index hasn't suffered a 1% decline in 53 trading sessions through Tuesday, marking the longest such stretch since January 2020, data compiled by Bloomberg show.
"Such a long streak of tranquility is certainly surprising, given all of the renewed fears swirling around rising interest rates, a spike in bond yields and elevated oil prices the past few months," said Thomas Martin, senior portfolio manager at Globalt Investments LLC.
Weakness in corporate profits or the economy will "force traders to stop being complacent and question the valuations of companies with lofty multiples."
At the same time, the market pared some earlier losses after Federal Reserve Bank of New York President John Williams told Bloomberg News he sees no need for the central bank to raise interest rates in 2027 after delivering one more increase this year.
According to Vital Knowledge's Adam Crisafulli, that view was likely influenced by "the waning impact of tariffs, anchored inflation expectations, muted wage growth, and indications that underlying inflation (excluding energy and AI) are at/near the 2% goal."
Among other individual stocks, JPMorgan - up just 3.8% this year through Monday - declined 0.9% despite boosting its net interest income forecast for the full year. Goldman Sachs climbed 0.2% after its equities traders blew past expectations in the third quarter. US banking stocks are already in a correction, with the KBW Bank Index down 13% from its mid-August peak.
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Citigroup Inc.'s fixed-income traders handed in their best third quarter in at least a decade, while Wells Fargo & Co. reported quarterly earnings that topped Wall Street estimates as consumers and businesses held steady. Citigroup fell 5.6% and Wells Fargo lost 3.1%.
Meanwhile, Six Flags Entertainment Corp. was down 14% as the company said it would temporarily close 10 rides at its theme parks, including one involved in a fatal accident on Monday.
Corporate America is navigating one of the strongest profit cycles in recent history. Yet investors are growing uneasy about whether massive AI spending will pay off, especially as a higher cost of capital raises the hurdle rate for investment.
That said, fund managers in Bank of America's latest survey are the most exposed to technology stocks since the rebound from the Covid pandemic six years ago, with 37% overweight the sector. About 45% of respondents agreed that there will be an AI bubble in 2027, while 42% don't see a bubble.
The latest report on the consumer price index is due on Wednesday, followed by the producer price index on Thursday. The S&P 500 is projected to swing 0.75% in either direction on Wednesday, options-market data compiled by Citigroup Inc. show.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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