US stock exchanges: Sliding price of chip stocks weighs on Wall Street – Goldman Sachs is gaining

The massive sell-off in chip stocks in the USA continues and continues to cause problems for the markets. At the same time, investors are now looking at the first quarterly reports from the major banks.

A street sign on Wall Street. Photo: dpa

Dusseldorf. The US stock exchanges showed mixed trading on Tuesday. The selloff in chip stocks continued for another day, putting pressure on stock markets. Investors are focusing on the start of the accounting season.

The Dow Jones standard shares are trading almost unchanged at 51,733 points.

The broader S&P 500 remains unchanged at 7,810 points.

The Nasdaq technology exchange is also trading almost unchanged at 27,220 points.

The Nasdaq 100, a reflection of the 100 non-financial companies with the highest market capitalization, is down 0.4 percent at 30,562 points.

On Monday, the major indices closed slightly lower, with the exception of the S&P 500. Trading was weighed down by a further rise in crude oil prices and a selloff in U.S. chip stocks. Semiconductor stocks in the USA and Asia fell significantly due to speculation about an end to the rapid price increases for memory chips.

The sales were triggered by media reports that the Chinese semiconductor company CXMT wants to bring a new generation of memory chips for data centers onto the market. This would allow CXMT to reduce its technological gap compared to Western providers. “The technological competition from the Middle Kingdom is fueling concerns about how long the high valuations and profit margins of the established chip companies can be justified,” said Andreas Lipkow, analyst at broker CMC Markets.

The day before the publication of the data on US consumer prices, Markus Koch reported a very cautious start to trading. The AI ​​sector remains under pressure.

The sell-off in technology stocks is causing investors to turn to government securities. Mirroring the rising prices, returns are falling. The yield on ten-year US bonds fell six basis points to 5.18 percent.

Oil prices are falling

Oil prices remain a dominant theme for markets amid geopolitical tensions in the Middle East and possible supply risks. The North Sea Brent variety for delivery in December rose in price by around 0.3 percent to around $105.93 per barrel (159 liters).

US President Donald Trump had previously said that Russia had agreed to supply diesel to global markets. His government has temporarily lifted US sanctions on Russian fuel.

At the same time, supply risks in the Middle East remained the focus of investors. “While fresh diesel supplies from Russia and more stable Saudi flows are providing some relief, the market still appears more concerned about the risk of further attacks on ships or pipelines in the Gulf,” said analyst Tim Waterer at brokerage KCM Trade.

OPEC also cut its forecast for oil demand growth this year to 400,000 barrels per day. At the beginning of the year it was still assumed to be 1.4 million barrels.

Major banks publish business figures

With the start of the accounting season, the stock market will face an important stress test in the next few weeks. The big banks in the USA traditionally kick things off: JP Morgan, Goldman Sachs Citigroup and Wells Fargo report on the third quarter on Tuesday before the start of trading on Wall Street. The financial figures from Morgan Stanley and Bank of America will follow on Wednesday.

Quarterly figures

Bond trading causes US bank figures to be weaker

Wells Fargo reports higher revenue in the third quarter. As the fourth-largest US financial institution announced on Tuesday, net profit rose to $5.95 billion in the three months to the end of September from $5.59 billion in the same period last year. The institute is benefiting from the fact that the US Federal Reserve Bank has lifted a regulatory cap on total assets. This gives Wells Fargo more flexibility to make loans.

Goldman Sachs also earned significantly more in the third quarter thanks to booming stock transactions. Profit climbed to $5.29 billion after $4.10 billion in the same period last year, the US investment bank announced. “Despite the current complexity and uncertainty in the world, we continue to be very well positioned to serve our customers,” said bank boss David Solomon. Goldman Sachs shares are up around 2.2 percent.

Citigroup posted a 40 percent jump in profits to $5.25 billion compared to the same period last year. At $2.85 per share, the bank beat analysts' estimates of $2.66. However, the surplus was ten percent lower than in the second quarter. Investment banking income rose by nine percent year-on-year, but has recently weakened due to fewer emissions. Citigroup's shares fell by 0.4 percent.

Investment bank JP Morgan reports an eight percent decline in investment banking fees compared to the second quarter. After a brilliant start to the year, customer activity weakened somewhat over the course of the quarter. Net profit rose to $15.3 billion in the three months to the end of September, after $14.4 billion in the same period last year. The weakening momentum is causing concern for investors. Nevertheless, the shares of the major US bank gained around 1.3 percent at the start of trading.

IMF Annual Meeting

The second day of the annual meetings of the International Monetary Fund (IMF) and the World Bank begins in Bangkok on Tuesday. Finance ministers and central bankers from all over the world meet here. The International Monetary Fund (IMF) presented its new forecast for the development of the global economy on Tuesday morning.

From the perspective of the IMF, the Iran war and the boom in artificial intelligence are dividing the global economy. While chip exporters such as Taiwan and South Korea grew significantly more than expected, oil importers, which did not have a strong tech industry, suffered in particular.

Look at the individual values

Visa: The prospect of entering the Chinese market is supporting Visa shares. The titles of the US credit card provider advanced by around 0.7 percent. Visa has received approval from China's central bank to prepare a business to process bank card payments. The People's Bank of China (PBOC) said the group has one year to do this. With the approval, Visa moves one step closer to its competitors American Express and Mastercard, which are already represented in the lucrative payment market that has so far been dominated by the state-owned China UnionPay.

Related topics

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Johnson & Johnson: The surprisingly strong figures from the US pharmaceutical and consumer goods group Johnson & Johnson (J&J) are leaving investors cold. The stocks fell by over six percent at the start of US trading, although the group has slightly raised its sales and profit forecast for the full year. The Middle East conflict has put a strain on J&J's medical technology business.

More: There is a gap in the global economy - these are the winners and the losers

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