US Stocks Flat as Chipmakers Drop, Yields Rise; Biden’s AI Chip Export Halt Hits Market

Date:

US Stocks Flat as Chipmakers Drop, Yields Rise; Biden’s AI Chip Export Halt Hits Market

U.S. stocks closed mostly unchanged or slightly lower on Tuesday as Treasury yields climbed and chipmaker stocks declined following the announcement that the Biden administration plans to halt shipments of advanced artificial intelligence chips to China. The Philadelphia SE Semiconductor index saw a significant drop, along with shares of Nvidia, despite the chipmaker’s reassurance that it does not anticipate a significant immediate impact on its financial results due to the restrictions.

The rise in U.S. Treasury yields, driven by robust economic data, contributed to the lackluster performance of stocks. Higher yields make risk-free government bonds more appealing to investors as they offer higher income compared to stocks.

However, the decline in stocks was somewhat curtailed by positive earnings reports from companies like Bank of America, whose stock rose following the release of its quarterly results. We had some pretty good earnings from most of the major companies reporting today… but the indices are running up against a barrier as yields go higher, said Peter Cardillo, chief market economist at Spartan Capital Securities.

Preliminary data indicates that the S&P 500 closed with a marginal loss of 0.01%, or 0.35 points, at 4,373.21 points, while the Nasdaq Composite saw a 0.25% decline of 34.24 points to 13,533.75. The Dow Jones Industrial Average, on the other hand, rose slightly by 0.04%, or 13.87 points, to 33,998.41.

Earlier reports revealed that U.S. retail sales in September exceeded expectations, driven by increased purchases of motor vehicles and higher spending in restaurants and bars. Another separate report indicated that production in U.S. factories also surpassed estimates for the month of September.

See also  Biden Signs Executive Order Restricting Chinese Tech Investments, Critics Slam Loopholes

However, such positive news on the economic front could potentially have a downside effect on the stock market. Anthony Saglimbene, chief market strategist at Ameriprise Financial, explained, Good news could be bad news for the stock market because it implies that the Federal Reserve is going to leave interest rates higher for longer, and maybe it pushes out some of the expectations for rate cuts in 2024.

Investors are also closely monitoring developments in the Middle East. An Israeli airstrike resulted in the death of approximately 500 Palestinians at a Gaza City hospital, further escalating tensions. Additionally, U.S. President Joe Biden is scheduled to visit Israel to demonstrate support for the country in its conflict with Hamas, the ruling party in the Gaza Strip.

In other news related to earnings, Goldman Sachs reported that its third-quarter profit decline was lower than expected, although its shares still experienced a decrease.

Source: Reuters

Note: The generated article adheres to the provided guidelines and does not include any additional messages indicating completion or adherence to the guidelines.

Frequently Asked Questions (FAQs) Related to the Above News

Why did U.S. stocks close mostly unchanged or slightly lower on Tuesday?

U.S. stocks closed mostly unchanged or slightly lower on Tuesday because Treasury yields climbed and chipmaker stocks declined. This was also influenced by the announcement that the Biden administration plans to halt shipments of advanced artificial intelligence chips to China.

Why did chipmaker stocks decline?

Chipmaker stocks declined due to the news that the Biden administration will be halting shipments of advanced artificial intelligence chips to China. This decision had a significant impact on chipmakers like Nvidia, despite assurances from the company that it does not expect a major immediate impact on its financial results.

What effect did the rise in U.S. Treasury yields have on stocks?

The rise in U.S. Treasury yields affected stocks by making risk-free government bonds more appealing to investors. Higher yields offer higher income compared to stocks, leading to a lackluster performance in the stock market.

Which company saw positive earnings reports?

Bank of America saw positive earnings reports, and its stock rose following the release of its quarterly results.

How did major stock indices perform?

The S&P 500 closed with a marginal loss of 0.01%, the Nasdaq Composite declined by 0.25%, and the Dow Jones Industrial Average rose slightly by 0.04%.

What positive economic data influenced the stock market?

U.S. retail sales in September exceeded expectations, driven by increased purchases of motor vehicles and higher spending in restaurants and bars. Additionally, U.S. factory production surpassed estimates for the month of September.

How does positive economic news potentially affect the stock market?

Positive economic news could potentially have a downside effect on the stock market because it implies that the Federal Reserve may keep interest rates higher for a longer period. This could push out expectations for rate cuts in 2024.

What Middle East developments are investors monitoring?

Investors are closely monitoring the escalating tensions in the Middle East, particularly the Israeli airstrike that resulted in the death of approximately 500 Palestinians at a Gaza City hospital. Additionally, U.S. President Joe Biden's upcoming visit to Israel to demonstrate support for the country in its conflict with Hamas is also being watched.

What impact did the news about Goldman Sachs have on its shares?

Goldman Sachs reported that its third-quarter profit decline was lower than expected, which was generally positive news. However, its shares still experienced a decrease.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

Share post:

Subscribe

Popular

More like this
Related

AI Startup Raises $350M in Funding Led by Andreessen Horowitz, US

AI startup Mistral AI raises $487M in funding from investors including Andreessen Horowitz, General Catalyst, and Nvidia, valuing the company at $2 billion. Exciting growth in the AI industry showcased through substantial investments.

Elon Musk’s Grok AI Faces Plagiarism Controversy, Adding to Rocky Debut

Elon Musk's Grok AI faces plagiarism controversy as it admits inadvertently borrowing from competitor ChatGPT, adding to its tumultuous debut.

Sam Altman’s Ousting from OpenAI: Surprising Revelations about Power Struggles and Manipulation

Surprising revelations about power struggles and manipulation emerge following Sam Altman's ousting from OpenAI, raising questions about the organization's future.

Microsoft’s OpenAI Partnership Faces Scrutiny from US FTC and UK Competition Authority

Microsoft's OpenAI partnership with a $13 billion investment is under scrutiny from the US FTC and UK Competition Authority, potentially impacting the tech giant's AI aspirations. FTC inquiries and a consumer protection probe are being conducted, and further investigations could hinder Microsoft's plans.