10am: Nasdaq chipmakers chipped away further
Wall Street’s sweeping semiconductor sell-off deepened in early Tuesday trading, with many investors seeming to move into the Dow’s blue-chip names.
The Dow gained 318 points, or 0.6%, while the Nasdaq Composite tumbled 1.2% and the S&P 500 slipped 0.2%.
The Nasdaq 100’s biggest fallers were mostly semiconductors, with Western Digital, Lumentum, Seagate and SanDisk all plunging more than 11%.
Micron, Lam Research, Marvell, AMD, Arm and Applied Materials lost 7-10%, as concerns over AI financing and Chinese competition intensified.
On the Dow, paints maker Sherwin-Williams and drinks maker Coca-Cola were top of early leaderboard, jumping 7% and 6.2% after impressing with earnings. Amgen, Salesforce and Home Depot were also well bid.
Among the pre-market reporters, PayPal rose 4.2%, Boeing gained 3.7% and Royal Caribbean added 2.4% following their results.
UPS sank 6%, however, while Hilton dropped 3.5% as investors gave their updates a cooler reception.
7.45am: More market rotation expected on Tuesday
Wall Street is heading for another mixed session on Tuesday, with blue-chip gains offset by concerns about AI spending and Chinese competition weighing on some technology stocks.
Dow Jones futures were up 317 points, or 0.6%, but the Nasdaq has been called 1% lower, with S&P 500 futures down 0.1%.
Chip stocks are expected to remain under pressure, with Nvidia down another 1% before the bell after dropping nearly 5% at the start of the week.
Yesterday, the Dow climbed 263 points or 0.5% to 52,210, while the S&P 500 was little changed, adding just 1.2 points to close at 7,413, while the Nasdaq fell 0.2% to 24,932.
Falling oil prices have provided some relief, leading to easing pressure from the bond market. WTI crude has fallen another 1.7% to $81.19 a barrel after President Donald Trump said there was “a good chance” of reaching a deal with Tehran.
Market watchers said this was shifting the focus from geopolitics towards the AI trade, where many investors seem increasingly concerned about the financing required for AI infrastructure and how long it will take for the spending to deliver returns.
Reports that Nvidia could provide $250 billion in financing guarantees for OpenAI‘s planned Ohio data center have added to those concerns. Chinese progress in developing chipmaking equipment has also raised questions about the competitive position of Western semiconductor companies.
“Investors are running out of patience to see these investments pay off,” said market analyst Kathleen Brooks at XTB.
This comes in one of the busiest weeks of the year, with the Federal Reserve beginning its two-day meeting today and several major technology companies due to report this week.
“Investors are becoming increasingly selective this earnings season, with strong revenue growth no longer enough to satisfy markets unless accompanied by evidence that elevated spending is translating into sustainable profitability,” said Daniela Hathorn at Capital.com.
Coca-Cola, Boeing, S&P Global, UPS, Royal Caribbean, Sherwin-Williams, Hilton and PayPal report before the bell. Visa, KLA, Seagate Technology, Mondelez, Ford and NXP Semiconductors follow after the close.
The Fed will announce its latest policy decision on Wednesday.
