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Markets·Tuesday, Oct. 13·After the close

Chip selloff drags Dow and small caps lower

The S&P 500 finished essentially flat, just shy of its record, as memory-chip stocks fell and bank earnings came in mixed, which dragged down the Dow and small companies.

Written and checked by software

The story

Memory-chip makers took the worst of it. Bloomberg reported that investors are tiring of the AI spending boom, and Micron, Sandisk and SK Hynix led the slide. Nvidia, oddly, closed up about 1%, so this wasn't a rout across all chip stocks.

The Dow fell about 180 points, roughly 0.35%. Bank earnings were mixed, Yahoo Finance reported, with Goldman Sachs up but Johnson & Johnson down after an earnings miss. Small caps had the roughest day, down about 0.75%. That's probably because smaller, riskier companies tend to struggle when interest rates stay high and the AI trade wobbles.

The S&P 500 held steady, about half a percent below its record. Meta helped, up about 2.6% after it unveiled a new AI model, which Bloomberg said was pitched as frontier-level. Interest rates helped too. The 10-year Treasury rate eased to about 5.22%. Bloomberg reported that New York Fed president John Williams said one more rate hike is likely this year and probably none next year. The drop may have started a bit before his interview came out.

Also today

  • Natural gas jumped about 4.7% to around $3.32, as heat in the Midwest and Mid-Atlantic strained power grids, Bloomberg reported.
  • U.S. oil rose about 1% to around $95 a barrel after Bloomberg reported Iran stepped up attacks on ships in the Strait of Hormuz. Global oil slipped about 0.5%, and there's no clear reason why.
  • Oil near $95 keeps heating oil costly as Maine heads into its heating season.

Storylines

  • AI trade fatigue: The chip selloff deepened, with Meta's new model the bright spot.
  • Q3 earnings season: Big banks kicked off with mixed results and record lending income.
  • Iran war oil shock and midterm fuel politics: More ship attacks in Hormuz, plus Republican pushback on the Russian diesel deal.
  • High yields and Fed hikes: The 10-year is still above 5.2%, and Williams sees one more hike this year.

Temperature

Warm · steady: The S&P is about half a percent from its record and the market's fear gauge sits near a normal 15, even though more stocks fell than rose.

Where this came from

Written by software from that day's market data and the headlines cited below, checked against the numbers by code, and published without a person's review. Nothing here is advice.