Nasdaq100 declines as chip stocks are affected by U.S. export bans on China

Oct 10, 2022
VOT Research Desk

Key News – Insights and Analysis

The Market Perspective:

The Nasdaq Composite was down 101.64 points, or 0.95%, at 10,550.77, the S&P 500 was down 21.12 points, or 0.58 percent, and the Dow Jones Industrial Average was down 54.42 points, or 0.19 percent, at 29,242.37 at 12:01 p.m. ET.

Microsoft Corporation (NASDAQ:MSFT) fell 2.22 percent, causing a 1.6% decrease in the S&P 500 technology sector index.

On Monday, the Nasdaq fell to its lowest level in two years as investors exercised caution ahead of the start of the earnings season and chipmakers bore the brunt of U.S. efforts to cripple China’s semiconductor industry.

After the Biden administration released a set of export controls on Friday, which included a measure to prevent China from purchasing certain semiconductor chips made anywhere in the world using U.S. equipment, the Philadelphia SE Semiconductor index also fell 3.5 percent to reach a two-year low.

Nvidia, one of the largest components of the index (NASDAQ: Qualcomm and NVDA) Corp (NASDAQ: Micron Technology Inc., QCOM) Inc. (NASDAQ: Advanced Micro Devices (NASDAQ: AMD),AMD) decreased from 1.13 percent to 3.65%.

Anxiety about the impact of inflationary pressures, rising interest rates, and geopolitical uncertainty on their profit has led major U.S. banks to set their third-quarter earnings season for Friday.

According to data, more analysts are predicting a downturn next year, so earnings for S&P 500 companies are now expected to rise by 4.1% for the last three months. This is down from the 11.1% increase that was anticipated at the beginning of July.

“There’s some concern about the continuation of softness as seen in the second quarter,” Frost Investment Advisors fund manager and senior equity analyst Jonathan Waite stated. “We’re rolling into earnings season now.”

After a strong jobs report for September, the Federal Reserve of the United States increased the likelihood that it would continue its aggressive interest rate hike campaign and likely push the U.S. economy into a recession, prompting a sharp decline on Wall Street on Friday.

On Monday, Charles Evans, president of the Chicago Fed, joined a chorus of other central bankers who backed the Fed’s attempt to lower inflation without a sharp increase in unemployment despite the Fed’s continued interest rate increases.

According to Randy Frederick, managing director of trading and derivatives for the Schwab Center, “We had a pretty sharp down day on Friday and there’s very little change in the picture from the Fed’s perspective on inflation or how fast rate hikes might continue to occur.”

“Since the midterms are coming up a week after we get at least to the Fed meeting on November 2,” the volatility will continue.

At the Fed’s meeting in November, money markets are pricing in a 89 percent chance of another 75 basis point hike.

Throughout the week, investors also awaited inflation reports, including consumer price data, which is anticipated to have likely increased last month.

On Monday, the United States bond market was closed in celebration of Columbus Day.

On the NYSE and the Nasdaq, declining issues outnumbered advancers 1.64 to 1 and 1.68 to

One new 52-week high and 49 new lows were recorded by the S&P index, while 351 new lows and 38 new highs were recorded by the Nasdaq.

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