Stocks Decline as Chipmakers Retreat

The S&P 500 Index ($SPX) (SPY) is down by -0.13% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.59%.  December E-mini S&P futures (ESZ26) are down -0.19%, and December E-mini Nasdaq futures (NQZ26) are down -0.63%.

Stock indexes are under pressure today, with the Nasdaq 100 falling to a 1.5-week low.  Weakness in chipmakers is driving the broader market lower amid concerns that investment in artificial intelligence may be unsustainable due to safety concerns and signs of funding strain.  Also, a selloff in South Korea’s Samsung Electronics and SK Hynix knocked South Korea’s Kospi Index down more than -5% today to a 2.5-month low amid concerns over intensifying competition from China, adding additional pressure to chip stocks.

Stocks traded mixed today, with the Dow Jones Industrials posting a 3-week high as T-note yields fell.  Bond yields moved lower on comments from Fed Governor Christopher Waller, who said the recent surge in long-term bond yields is helping to curb demand in interest-rate-sensitive sectors, such as housing and automobiles, doing some of the Fed's work to tighten monetary policy.  Waller’s comments suggest he favors holding policy steady at the FOMC meeting later this month. 

Hawkish comments today from Chicago Fed President Austan Goolsbee limited the decline in T-note yields when he said inflation tied to the AI boom is "jumping out of its lane" and starting to push up prices in unrelated corners of the economy.  The 10-year T-note yield is down -2 bp to 5.22%.

Today’s US economic news is supportive for stocks after Sep existing home sales unexpectedly rose +1.5% m/m to 3.99 million, stronger than expectations of a decline to 3.95 million.

Stocks have support from the prospect of solid quarterly earnings results starting this week.  Goldman Sachs on Monday raised its three-month view on global equity markets to overweight from neutral, saying. “Earnings growth remains supportive for equities and the recent valuation de-rating has improved asymmetry into the third-quarter earnings season.” 

According to data compiled by Bloomberg Intelligence, Q3 S&P 500 profits are expected to climb by +25% from a year earlier, up from a July estimate of 22%.  Q3 earnings season begins this week when US money center banks report.

The International Monetary Fund (IMF) raised its 2026 global GDP forecast to 3.1% from 3.0% in July and kept its 2026 global consumer price forecast unchanged from July at 4.7%.

Nov WTI crude oil prices (CLX26) are slightly lower today, giving back some of Monday’s +2% increase as Saudi crude output recovered.  Saudi Arabia said its Sep crude production rose by +2 million bpd (+40% m/m) to 8.732 million bpd, recovering from a 36-year low in August.  Goldman Sachs estimates a $24-a-barrel risk premium in crude oil prices due to the Middle East conflict.  However, if Europe releases half the diesel it has announced from reserves, fair value prices could fall by about $11 a barrel.

Markets are discounting a 24% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.41%.  China's Shanghai Composite recovered from a 2.5-month low and closed up +0.10%.  Japan's Nikkei-225 Stock Average fell to a 1.5-week low and closed down -1.82%.

Interest Rates

December 10-year T-notes (ZNZ6) are up by +5 ticks today.  The 10-year T-note yield is down -2.7 bp to 5.213%.  Dec T-notes rose to a 1-week high today, and the 10-year T-note yield fell to a 1-week low of 5.171%.  Lower inflation expectations support T-notes after the 10-year breakeven inflation rate fell to a 1-week low today at 2.336%.  Dovish comments from Fed Governor Christopher also supported T-note prices when he said the recent surge in long-term bond yields is doing some of the Fed’s work to tighten monetary policy, suggesting he favors holding policy steady at the FOMC meeting later this month. 

T-notes fell back from their best level after Chicago Fed President Austan Goolsbee said inflation is still too high.  Also, today’s report showing Sep existing home sales unexpectedly increased weighed on T-notes.

European government bond yields are mixed today.  The 10-year German bund yield fell to a 1-week low of 3.426% and is down -1.5 bp to 3.462%.  The 10-year UK gilt yield is up +0.4 bp to 5.445%.

Markets are discounting a 12% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.

US Stock Movers

Chipmakers and AI-infrastructure stocks are falling for a second session today, weighing on the overall market.  The iShares Semiconductor ETF (SOXX) is down more than -1% to a 3-week low.  Micron Technology (MU) is down more than -5%to lead losers in the Nasdaq 100, and Applied Materials (AMAT) is down more than -4%.  Also, Western Digital (WDC), Seagate Technology Holdings Plc (STX), Sandisk (SNDK), Lam Research (LRCX), and Lumentum Holdings (LITE) are down more than -3%.  In addition, ARM Holdings (ARM), Marvell Technology (MRVL), ASML Holding NV (ASML), and KLA Corp (KLAC) are down more than -2%. 

Software stocks are up today, helping limit losses in the broader market.  IBM (IBM) is up more than +2%  to lead gainers in the Dow Jones Industrials, and Salesforce (CRM) is up more than +2%.  Also, Atlassian Corp (TEAM), ServiceNow (NOW), Intuit (INTU), Microsoft (MSFT), and Oracle (ORCL) are up more than +1%.

Syndax Pharmaceuticals (SNDX) is down more than -17% after saying its MAXPIRe Phase 2 trial of its axatilimab to treat idiopathic pulmonary fibrosis failed to meet its primary endpoint.

AST SpaceMobile (ASTS) is down more than -9% after Piper Sandler downgraded the stock to neutral from overweight.

Johnson & Johnson (JNJ) is down more than -5% to lead losers in the Dow Jones Industrials after forecasting full-year sales of $101.00 billion to $101.40 billion, the midpoint below the consensus of $101.24 billion.

SentinelOne (S) is down more than -3% after announcing that it intends to offer $1.25 billion in convertible senior notes due in 2031 via private placement.

Meta Platforms (META) is up more than +3%, adding to Monday’s +3% gain, after releasing a new artificial intelligence model called Muse Wonder, which the company claims has “frontier capabilities.”

Ollie’s Bargain Outlet Holdings (OLLI) is up more than +2% after its Board of Directors approved a $500 million stock buyback plan.

YETI Holdings (YETI) is up more than +1% after Ladenburg Thalmann & Co initiated coverage on the stock with a buy recommendation and a price target of $52.

Earnings Reports (10/13/2026)

Albertsons Cos Inc (ACI), Citigroup Inc (C), Domino's Pizza Inc (DPZ), Goldman Sachs Group Inc/The (GS), Johnson & Johnson (JNJ), JPMorgan Chase & Co (JPM), UnitedHealth Group Inc (UNH), Wells Fargo & Co (WFC).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.