Tuesday’s closing price of U.S. equities was flat to lower due to an increase in Treasury rates and a decline in chipmaker shares following the announcement by the Biden administration that it would stop shipping cutting-edge artificial intelligence processors to China.
Nvidia’s stock fell dramatically along with the Philadelphia SE Semiconductor index, despite the fact that the most valuable chipmaker in the world stated it does not anticipate the limitations having a significant effect on financial performance in the near future.
Treasury rates in the US increased on strong economic statistics. Increased yields provide investors with relatively substantial income on risk-free government bonds, which lessens the appeal of equities.
Positive earnings reports from businesses, such as Bank of America, whose shares increased after its quarterly results, helped to contain the falls, though.
According to Peter Cardillo, chief market economist at Spartan Capital Securities in New York, “we had some pretty good earnings from most of the major companies reporting today… but the indices are running up a brick wall as yields go higher.”
Preliminary data shows that the Nasdaq Composite dropped 34.24 points, or 0.25%, to 13,533.75, while the S&P 500 lost 0.35 points, or 0.01%, to close at 4,373.21 points. To reach 33,998.41, the Dow Jones Industrial Average increased 13.87 points, or 0.04%.
Previous data revealed that families boosted their purchases of cars and raised their spending at bars and restaurants in September, resulting in a greater than anticipated gain in U.S. retail sales. Separate data revealed that September production at US companies grew more than anticipated.
Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan, said that good news could be bad news for the stock market because it suggests that the Federal Reserve will keep interest rates higher for longer and possibly pushes out some of the expectations for rate cuts in 2024.
Additionally, investors are still closely observing Middle East headlines. About 500 Palestinians were murdered by an Israeli airstrike at a Gaza City hospital, and on Wednesday, U.S. President Joe Biden is scheduled to visit Israel to express support for the nation in its conflict with Hamas, the organisation that controls the Gaza Strip.
In other earnings-related news, despite a decline in its shares, Goldman Sachs’ third-quarter profit decreased less than anticipated.