Be careful before the US elections: Tech stocks are turning up - Apple is acting as a brake

On Wall Street, investors are buying AI and chip stocks again: Nvidia, Microsoft and Amazon are making significant gains, while Apple is coming under pressure. Investors remain cautious ahead of the landmark US midterm elections.

The US stock exchanges closed mixed on Tuesday. Investors held back from the results of the US midterm elections. The Dow Jones index of standard stocks lost 0.4 percent to 51,787 points. The broader S&P 500, however, gained 0.4 percent to 7,568 points. The technology-heavy Nasdaq gained 0.8 percent to 25,372 jobs.

A slowdown was Apple, whose shares fell 1.9 percent. The iPhone maker had warned that memory chip costs would continue to rise and weigh on gross margins in the key holiday quarter. In contrast, shares of AI and chip companies recovered after recent losses. Nvidia rose by 2.3 percent, while Microsoft and Amazon each increased by more than two percent.

"This is a shift from safe technology stocks like Apple to riskier ones like chipmakers," said Jay Hatfield, head of Infrastructure Capital Management.

Pfizer raised its growth forecasts for the year as momentum in new products such as cancer drug Padcev helped offset declining sales of its Covid-19 vaccine and treatments.

Yum Brands said sales at its Taco Bell franchise have rebounded since late September following a Cyclospora outbreak linked to its foods.

The rise in fuel prices in the third quarter boosted Marathon Petroleum's profit growth. The company reported net income more than fivefold in the third quarter and posted higher profit margins for each barrel of oil processed. The company also agreed to sell two Midwest refineries to Carl Icahn-controlled rival CVR Energy for about $4.2 billion.

The recovery in technology stocks follows a period of weakness. The Nasdaq 100 closed on Monday more than ten percent below its record high from the beginning of October and was therefore in a technical correction. Investors are concerned that corporations' massive investments in AI infrastructure could outweigh short-term profitability. Despite the recent losses, the S&P 500 is still up more than ten percent for the full year 2026.

Investors also focused on the midterm elections in the USA. Voters will decide on Tuesday the majority in Congress for the remaining two years of President Donald Trump's second term.

"Markets will assess the potential impact on fiscal policy, regulation, taxation and government spending," said Ken Mahoney, head of Mahoney Asset Management. It was good to put this event behind us, as it had caused expected uncertainty for some time.

Crude oil futures fell 37 cents, or 0.4 percent, to $96.09 a barrel in New York. A plunge in oil prices on Monday weakened on Tuesday as reports emerged that the US military had attacked Iran's Qeshm Island. President Trump has hinted that peace negotiations could resume soon, but there is little sign of compromise from either side on the future of the Strait of Hormuz or other key issues.

Gold futures fell $29, or 0.7 percent, to $3,927.90 an ounce, closing within 1.1 percent of their yearly low.

Wall Street forecasters remained divided on the risks in the stock market. “Virtually every alarm bell is ringing right now warning of a substantial bear market ahead,” Elliott Investment Management wrote in an October investor letter seen by The Wall Street Journal.

The hedge fund, run by activist investor Paul Singer, compared speculation on AI companies to the overheated stock market of the 1920s, where retail investors once again made leveraged bets on stocks through margin trades and, in this case, derivatives markets.

Singer's warning echoes hedge fund manager Ken Griffin's comments last month that the AI ​​boom shows all the signs of a speculative bubble.

Those with a more optimistic outlook, including UBS Global Wealth Management, argue that the recent tech sell-off is more of a temporary phenomenon than the bursting of a bubble, pointing to continued strong demand for AI infrastructure equipment.