Nvidia, which currently dominates the AI chips sector, fell 6.7% to a two-month low, while Advanced Micro Devices fell 9%.The Philadelphia SE Semiconductor index fell 3% after rising 4.6% on Monday.
“There’s a false expectation that there’s only one chip company and no one else is competing, and we have a headline that reminds us that that’s just not the case,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.
The Nasdaq posted its biggest one-day gain in six months on Monday as investors snapped up tech stocks after several selloffs in recent weeks, driven by concerns about over-inflated valuations in the sector and high AI spending by major companies. The S&P 500 and Nasdaq are on track to post their worst monthly performances since March. At 10:17 a.m. ET, the Dow Jones Industrial Average rose 131.79 points, or 0.29%, to 46,583.58. The S&P 500 fell 8.75 points, or 0.13%, to 6,696.37 and the Nasdaq Composite fell 126.39 points, or 0.56%, to 22,744.50.
DELAYED DATA CLOSE IN
A Commerce Department report showed retail sales rose 0.2% in September, less than the 0.4% increase that economists polled by Reuters expected.
A separate report showed producer prices recovered in September as the cost of energy goods soared and producers passed on some tariffs.
Traders’ bets on a 25 basis point rate cut next month were little changed, according to the data, and last had odds of 83%, according to the CME Group’s FedWatch Tool, double from about 40% last week.
Market sentiment has been buoyed recently by rising expectations that the Federal Reserve will cut borrowing costs in December, following forgiving comments from voting members of the Federal Open Market Committee such as John Williams and Christopher Waller.
“Some data suggests the economy is slowing. It gives the Fed the first piece of data to start thinking about a cut,” Blancato said.
Meanwhile, the hunt for the next Fed chairman was on, with Treasury Secretary Scott Bessent saying the announcement could come before Christmas.
Eight of the 11 major S&P 500 sectors were higher, with the communications services and healthcare indexes posting the biggest gains.
Retailers also got a boost after department store operator Kohl’s rose 34% and clothing retailer Abercrombie & Fitch jumped 28%, with both companies raising their annual profit forecasts.
Clothing retailer Burlington Stores fell 10.5% after third-quarter sales missed expectations.
Alibaba’s U.S.-listed shares fell 2.3%, erasing early gains after the Chinese e-commerce giant beat analysts’ expectations for quarterly revenue.
Advancing issues outnumbered declining issues on the Nasdaq by a ratio of about 1.45 to 1 and a ratio of 2.3 to 1 on the NYSE.
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