Nasdaq registers lowest close since July 2020; chips stocks fall

The Dow was up almost 200 points right out the gate but then fell almost 500 points by 1 pm only to rise to break-even by 2 pm, then rise and fall again twice by 3:30, then fall again in the final half hour to close nearly 100 down again. So even though it looked like a lackluster day, it was actually quite volatile as the other indexes more or less followed suit with the Nasdaq reaching its lowest close in over two years.  There was a lot going on today, not the least of which was the Fed Vice Chair commenting that the rate hikes may be slowing the economy faster than expected, exactly what investors feared.

That was immediately complemented by the Chicago Fed prez once again reiterating that the rate hikes would beat inflation “while also avoiding recession.” Biden’s new directives to punish China’s chip industry for its recent threats against Taiwan boomeranged back on the market’s chip index, driving it down 3.5%.  And Q3 profit estimates have been driven down from 11.1% in July to 4.1% today. But do keep in mind that quarterly forecasts have for some time now been highly pessimistic while the actuals turn out much better.  So keep the faith. More inflation data coming this week.  Volume was quite low at 9.6 billion. 

Mon  October 10, 2022  4:38 PM

Nasdaq registers lowest close since July 2020; chips stocks fall

By Caroline Valetkevitch

DJ: 29.296.79  -630.15        NAS: 10,652.41  -420.91       S&P: 3,639.66  -104.86    10/7

DJ: 29,202.88  -93.91          NAS: 10,542.10  -110.30       S&P: 3,612.39  -27.27      10/10

NEW YORK, Oct 10 (Reuters) - U.S. stocks fell on Monday, with the Nasdaq posting its lowest close since July 2020, as investors worried about the impact of higher interest rates and pulled out of chipmakers after the United States announced restrictions aimed at hobbling China's semiconductor industry.  Federal Reserve Vice Chair Lael Brainard said tighter U.S. monetary policy has begun to be felt in an economy that may be slowing faster than expected, but the full brunt of Fed interest rate increases still won't be apparent for months. read more  Despite growing concerns by a number of economists and analysts that the Fed's interest rate hikes could increase unemployment, Chicago Fed President Charles Evans continued to back the central bank's attempt to lower inflation, saying that while it sounds "optimistic" he believed it could do so "while also avoiding recession." read more

"People are worried about the economy. People are worried about a possible recession," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.  The Philadelphia SE Semiconductor index (.SOX) dropped 3.5% after the Biden administration published a set of export controls on Friday, including a measure to cut China off from certain semiconductor chips made anywhere in the world with U.S. equipment. read more  Shares of Nvidia Corp (NVDA.O) fell 3.4%, while Qualcomm Inc (QCOM.O), Micron Technology Inc (MU.O) and Advanced Micro Devices (AMD.O) also ended lower.

Investors were also cautious ahead of the U.S. third-quarter earnings season, which is set to kick off on Friday with results from some of the major banks.

The Dow Jones Industrial Average (.DJI) fell 93.91 points, or 0.32%, to 29,202.88, the S&P 500 (.SPX) lost 27.27 points, or 0.75%, to 3,612.39 and the Nasdaq Composite (.IXIC) dropped 110.30 points, or 1.04%, to 10,542.10.

Estimates for third-quarter earnings have come down in recent weeks. Analyst now expect year-over-year earnings for S&P 500 companies to have risen 4.1% in the quarter, compared with an increase of 11.1% expected at the beginning of July, according to IBES data from Refinitiv.

Microsoft's (MSFT.O) stock was down 2.1% and was among the biggest drags on the three major indexes. S&P 500 technology (.SPLRCT) led sector declines along with energy (.SPNY).

Investors were also awaiting U.S. inflation data this week.

The U.S. bond market was shut for the Columbus Day holiday on Monday.

Declining issues outnumbered advancing ones on the NYSE by a 2.43-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored decliners.  The S&P 500 posted 1 new 52-week highs and 73 new lows; the Nasdaq Composite recorded 58 new highs and 461 new lows.

Volume on U.S. exchanges was 9.66 billion shares, compared with the 11.73 billion average for the full session over the last 20 trading days.