Chip Selloff Rolls On as Big Bank Earnings Begin: Markets Wrap
(Bloomberg) — A selloff in chipmakers deepened on concerns about the sustainability of the artificial-intelligence trade, weighing on equity markets as Wall Street banks kicked off the earnings season.
In a renewed bout of weakness, a closely watched gauge of semiconductor powerhouses extended its plunge from a June record to about 17%. The measure slipped 1.2% on Tuesday, extending losses into a fifth straight day. Most S&P 500 firms fell. Long-term Treasuries rose ahead of key inflation data. While Brent crude dropped, it remained above $105 a barrel.
Insatiable demand for all things related to AI had powered a surge in chipmakers from this year’s market lows. But volatility has resurfaced amid worries about the staying power of an investment boom propped up by rising debt levels, stretched valuations and intensifying competition.
The latest sell trigger came from Chinese giant CXMT Corp. declaring it achieved a breakthrough in chip technology that rivals had pursued for years, which undermined the case to be bullish on its global memory peers.
The memory-chip sector is prone to “vicious” boom-and-bust cycles and the problem may only worsen as Chinese companies ramp up capacity, according to Cathie Wood of ARK Investment Management LLC.
Investors chasing the AI-powered equity rally are the most exposed to technology shares since the rebound from the Covid pandemic six years ago, according to a poll by Bank of America Corp.
“AI presents significant opportunities, but also significant risks that must be carefully assessed and managed,” Goldman Sachs Group Inc. Chief Executive Officer David Solomon told analysts on a call. The bank is “remaining vigilant around the types of activity we finance” and is “highly selective about the risk we underwrite and the capital we commit.”
Meantime, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. set a fresh record in the third quarter for how much they earned from lending, with customers continuing to borrow even as interest rates increased.
Traders also geared up for Wednesday’s reading on consumer prices. Higher gasoline costs probably led to quicker overall inflation in September even as underlying price pressures moderated, supporting views that the Federal Reserve will refrain from raising rates this month.
Fed Governor Christopher Waller said the surge in long-term Treasury yields is helping to curb demand in rate-sensitive sectors such as housing and automobiles, doing some of the work of tighter monetary policy.
Corporate Highlights:
Meta Platforms Inc. analysts remained positive in the wake of the release of the company’s latest artificial-intelligence model, which firms wrote underscore the ability to compete at the frontier level of AI. Apple Inc. introduced a new device called the HomeView, a $299 display that serves as the centerpiece of its push to challenge Amazon.com Inc. and Alphabet Inc.’s Google in the smart home market. Johnson & Johnson reported another quarter of anemic sales in its medical technology division and said it is leaning toward spinning off, rather than selling, its orthopedics business. UnitedHealth Group Inc. raised its profit outlook for the year after reporting better-than-expected earnings in the third quarter, a sign of progress in the turnaround of the largest US healthcare conglomerate following a disastrous 2025. Domino’s Pizza Inc.’s sales at existing US locations grew less than analysts expected, with the pizza chain still struggling to attract budget-conscious consumers. Six Flags Entertainment Corp. said it would temporarily close 10 rides at its theme parks, including one that was involved in a fatal accident on Monday, amid a string of incidents at its facilities. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.1% as of 12:20 p.m. New York time The Nasdaq 100 fell 0.4% The Dow Jones Industrial Average fell 0.4% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.3% to $1.1194 The British pound rose 0.3% to $1.3247 The Japanese yen rose 0.2% to 158.37 per dollar Cryptocurrencies
Bitcoin rose 0.5% to $83,443.09 Ether rose 0.1% to $2,519.44 Bonds
The yield on 10-year Treasuries declined two basis points to 5.22% Germany’s 10-year yield was little changed at 3.47% Britain’s 10-year yield was little changed at 5.45% Commodities
West Texas Intermediate crude rose 0.2% to $93.90 a barrel Spot gold fell 0.4% to $4,157.39 an ounce ©2026 Bloomberg L.P.
