On Tuesday, the three major U.S. stock indices closed slightly lower, as the earnings season failed to boost market sentiment. JPMorgan Chase's earnings fell short of expectations, and Citigroup and Wells Fargo faced selling pressure after releasing their results. Chip stocks came under pressure during the session but recovered most of their losses by close; however, Micron and Applied Materials still declined significantly. Apple officially launched its HomeView smart home device, and its stock rose briefly before closing only marginally higher. Tonight’s U.S. September CPI data will test market expectations regarding a pause in rate hikes this month.
S&P fell 0.02%; seven giants saw five gains and two losses.
The S&P 500 fell 0.02% to close at 7,805.45; the Nasdaq dropped 0.15% to close at 27,204.38; the Dow Jones fell 0.35% to close at 51,670.10. The Russell 2000 declined 0.40% to 2,783.37, while the VIX rose 0.39 points to 15.27, up approximately 2.62%.
Sector performance continued to diverge. Energy rose approximately 1.7%, communication services increased about 0.9%, utilities gained around 0.6%, and materials and consumer discretionary closed higher; healthcare declined 1.33%, financials fell 0.41%, industrials, consumer staples, and real estate dropped, while information technology was nearly flat. Johnson & Johnson dropped 5.73%, significantly weighing on both the healthcare sector and the Dow Jones Industrial Average.
Among the Magnificent Seven, Meta rose 2.63%, NVIDIA increased 0.97%, Microsoft gained 0.43%, Alphabet A climbed 0.30%, and Apple edged up 0.09%; Amazon fell 0.37%, and Tesla declined 0.74%.
The Philadelphia Semiconductor Index closed down 0.2% at 12,208.8, marking its fifth consecutive day of declines, after falling more than 3% intraday. The Nasdaq Golden China Index edged slightly higher.
The U.S. Treasury spot market has resumed trading, with long-term yields declining. At the close of trading in New York, the 2-year Treasury yield was 4.791%, the 10-year yield was 5.216%, and the 30-year yield was 5.562%.
WTI crude oil November contract rose 0.43% to settle at $94.14 per barrel; Brent December contract fell 0.90% to settle at $105.69 per barrel. COMEX gold futures declined 0.15% to $4,184.20 per ounce. Around 9 a.m. Beijing time today, Bitcoin was approximately $83,300 and Ethereum approximately $2,500.
Large banks' profits are growing, but their stock prices aren't responding.
JPMorgan Chase reported third-quarter net income of $15.3 billion, a 6% year-over-year increase, and earnings per share of $5.57, below analysts’ expectations of approximately $5.90. Revenue, on a managed basis, totaled approximately $50.9 billion; equity trading revenue rose 49% year-over-year, while fixed income trading revenue declined 4%.
Losses on investment securities also weighed on results. JPMorgan Chase reported a pre-tax net loss of $658 million on investment securities; even excluding this item, adjusted earnings per share of $5.75 still fell short of expectations. The stock ultimately declined by about 0.9%. This earnings report reflects continued growth in trading, but the performance gap between different business segments is widening.
Goldman Sachs reported third-quarter net revenue of $18.68 billion, net profit of $5.29 billion, and earnings per share of $17.01. Equity trading performed strongly, but the stock still slipped slightly by about 0.2%. Wells Fargo’s net interest income fell short of expectations, causing its stock to drop 3.1%; Citigroup fell 5.6%.
On the first day of earnings season, year-over-year profit growth alone is not enough to support stock prices. Investors are also examining revenue composition, financing costs, and forward guidance, with bank stocks feeling the pressure of high expectations first.
AI funding is beginning to select projects, while internal differentiation continues among chip stocks.
Micron fell approximately 3.62%, and Applied Materials dropped 6.69%. Advancements by CXMT continue to fuel competitive concerns, pressuring memory and semiconductor equipment stocks; however, stocks such as NVIDIA and AMD rebounded intraday, significantly narrowing the decline of the Philadelphia Semiconductor Index.
Beyond competition, financing terms for AI infrastructure have become a new focus for the market. According to Bloomberg, JPMorgan Chase and Goldman Sachs arranged a $5 billion loan for Volta, but only provided underwriting commitments for $1.3 billion of the term loan, with no underwriting保障 for the remaining $3.7 billion in chip financing.
The financing is intended for Norway’s data center and GPU purchases, with an advertised yield of approximately 11% for investors. Both banks are still organizing the financing but are unwilling to bear the risk of being unable to sell the entire loan. Companies borrowing to purchase GPUs and rent out computing power are now more concerned about whether the financing will materialize and whether rental income will cover interest payments.
Apple HomeView launches at $299 to compete for the home entry point.
Apple officially launched HomeView, featuring a 7-inch display and A18 chip, available in desktop and wall-mounted versions, both priced at $299 in the U.S., with availability starting November 13.
The device integrates Siri AI, FaceTime, home monitoring, and smart home control, capable of recognizing up to six users and switching between their individual calendars, messages, and personalized interfaces. Apple also updated the Apple TV 4K and HomePod mini, and launched smart home accessories in collaboration with LG Electronics and Schneider Electric.
Apple is extending Siri AI into everyday home scenarios. What remains to be seen is whether voice interaction can drive device sales and increase the frequency of home service usage. The capital market responded cautiously; Apple's stock reached an intraday high of $348.15 but closed at $341.27, up just 0.09%, with a market capitalization of approximately $4.98 trillion.
Williams discusses rate hikes; U.S. Treasury yields decline
New York Fed President Williams said that one more rate hike this year may still be appropriate, but based on current assessments, further hikes may not be necessary by 2027. He also emphasized that upcoming data could alter this assessment.
Markets had previously feared that tightening would continue into next year, and these remarks have eased some of those expectations. Long-term U.S. Treasury yields have declined, but tonight’s inflation data could still alter pricing for this month’s interest rate meeting.
Today's Focus
At 20:30 tonight, the U.S. will release the September CPI data. Markets expect the overall CPI to rise year-over-year to approximately 3.6%, with Reuters surveying 3.7%; core CPI is projected to be around 2.5% year-over-year. Beyond energy’s impact on overall inflation, whether core service prices continue to rise will be more critical in determining the Fed’s next move.
ASML, Bank of America, and Morgan Stanley have released their earnings reports. For ASML, focus on new orders, demand for advanced process equipment, and future guidance; Bank of America and Morgan Stanley will continue to assess the performance of net interest income, trading activities, and wealth management businesses.
Article by: Tide Research