S&P 500 and European Indexes Turn Lower, ASML Warning Drives Chip Stocks Down

Alexander Garcia
15 Oct, 2024
Miami

Wall Street indexes struggled to advance, and tech stocks turned lower after Dutch chip equipment maker issued a cautious outlook. 

The S&P 500 index declined 0.4% and the Nasdaq Composite fell 0.9% after ASML Holding said demand recovery is more gradual than previously estimated. 

Following the ASML's revised outlook, AMD, Nvidia, Broadcom, and Micron Technology declined between 4% and 5%. 

ASML revised its annual revenue estimate to fall between Є30 billion and Є35 billion, near the low end of its previous annual outlook. 

The company said net sales in the September quarter were Є7.5 billion and new orders were Є2.6 billion.  

Crude oil plunged 5% after supply-demand imbalances overshadowed Iran-Israel tensions. 

Investors have been bidding up stocks over the last five weeks following a raft of positive economic reports and continued optimism about artificial intelligence. 

Moreover, investors are hoping that the Federal Reserve will be able to cool inflation while avoiding the economy dipping into a recession. 

However, market sentiment has been on edge amid rising tensions in the Middle East, ongoing war in Ukraine, a close presidential election, and interest rate path uncertainty. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.5% to 5,834.61, the Nasdaq Composite fell 0.8% to 18,341.41, and the Russell 2000 index advanced 0.9% to 2,268.52.

The yield on 2-year Treasury notes edged lower to 3.97%, 10-year Treasury notes inched down to 4.08%, and 30-year Treasury bonds inched higher to 4.38%.

WTI crude oil decreased $3.50 to $70.30 a barrel, and natural gas prices edged up 1 cent to $2.50 a thermal unit.

Gold fell by $14.18 to $2,663.18 an ounce, and silver decreased by $0.38 to $31.58.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.30.

 

U.S. Stock Movers

Goldman Sachs increased 2.6% to $536.55 after the investment banker reported better-than-expected quarterly results. 

Revenue in the third quarter increased 7% to $12.7 billion from $11.8 billion, net income advanced 45% to $2.99 billion from $2.06 billion, and diluted earnings per share rose 54% to $8.40 from $5.47 a year ago. 

Bank of America advanced 2.7% to $43.06 after the financial service provider reported better-than-expected earnings. 

Revenue in the third quarter increased to $25.3 billion from $25.2 billion, net income eased to $6.9 billion from $7.8 billion, and diluted earnings per share fell to 81 cents from 90 cents a year ago. 

Provision for credit losses was flat at $1.5 billion from the previous quarter and higher than $1.2 billion a year ago. 

Citigroup decreased 1.5% to $65.01 after the global bank reported third quarter results that fell short of investor expectations. 

Revenue increased 1% to $20.3 billion from $20.1 billion, net income fell 9% to $3.2 billion from $3.5 billion, and diluted earnings per share fell to $1.51 from $1.63 a year ago. 

Coty dropped 5.9% to $8.63 after the beauty company reported weaker-than-estimated revenue growth in its latest quarter. 

The company said comparable sales in the fiscal first quarter ending in September increased between 4% and 5%, lower than its previous estimate of 6%. 

The beauty company said it will release its full results on November 6. 

UnitedHealth Group declined 9.1% to $549.99 after the health insurer reported higher-than-expected medical costs. 

Revenue in the third quarter increased to $100.8 billion from $92.4 billion, net income attributable to shareholders advanced to $6.1 billion from $5.8 billion, and diluted earnings per share rose to $7.15 from $6.56 a year ago. 

Medical costs jumped to $66 billion from $59.6 billion, and total operating costs rose to $92.1 billion from $83.8 billion a year ago. 

The company lowered its full-year net income per share outlook to between $15.50 and $15.75. 

 

European Markets Closed Down 

European markets struggled to hold gains after advancing the previous two sessions as investors reviewed the fresh batch of mixed economic data. 

Benchmark indexes in Paris, London, and Frankfurt traded around the flatline, and crude oil prices plunged as much as 5% in London trading. 

Industrial production in the Euro Area increased 1.8% from the previous month in August, according to a preliminary report from Eurostat. 

On an annual basis, production edged up only 0.1%, driven by a 4.8% decrease in durable consumer goods and a 2.7% fall in intermediate goods. 

 

France's Monthly CPI Falls the Most in Three Decades 

France's consumer price inflation slowed slightly more than previously estimated in September, according to the statistical agency INSEE. 

Monthly consumer price inflation fell 1.2% in September after increasing 0.5% in the previous month, according to France's statistical agency INSEE. 

The monthly decline was the largest since the inflation series started in 1990, driven by a 13.5% decline in transportation prices and a 2.2% fall in the prices of services. 

On an annual basis, consumer price inflation slowed to an increase of 1.1% in September from a rise of 1.8% in the previous month. 

Core inflation, which excludes energy and food prices, also rose at a slower pace of 1.4% in September from a 1.7% increase in August. 

 

Germany's Wholesale Price Deflation Deepens

Germany's wholesale prices fell at the fastest pace in five months in September, according to a monthly report released by Destatis. 

The annual wholesale prices in September fell 1.6%, faster than the decline of 1.1% in August. 

The main driver of the decline in wholesale prices was the fall of 14.6% in mineral oil products, 5.8% decline in steel and semi-finished products, and 5.2% decrease in data processing equipment. 

 

Europe Indexes and Yields

The DAX index decreased by 0.1% to 19,486.19; the CAC-40 index fell by 1.1% to 7,521.97; and the FTSE 100 index declined by 0.5% to 8,249.28. 

The yield on 10-year German bonds edged lower to 2.22%, French bonds inched lower to 2.97%, the UK gilts edged down to 4.19%, and Italian bonds decreased to 3.47%.

The euro edged lower to $1.09; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 86.16 Swiss cents.

Brent crude decreased $3.34 to $74.11 a barrel, and the Dutch TTF natural gas fell by €0.43 to €40.12 per MWh. 

 

Europe Stock Movers

LM Ericsson soared 9.9% to SEK 86.10 after the Swedish telecom equipment maker said net income in the third quarter swung to a profit compared to a loss a year ago. 

Moreover, India-based Bharti Airtel also placed a multi-billion-dollar order for 5G wireless telecom equipment. 

Oil explorers declined after crude oil prices fell as much as 5% on a report that Israel is not targeting Iran's nuclear and oil infrastructure. 

Moreover, China's September imports rose only 0.6%, suggesting weak domestic demand. 

BP plc declined 4.7% to 389.0 pence, Shell PLC fell 3.7% to 2,494.88 pence, and TotalEnergies decreased 4.3% to €59.80. 

TotalEnergies said its downstream results are expected to decline sharply because of weak refining margins in Europe and other regions. 

Tele2 AB increased 1.2% to SEK 112.85, and the company appointed Jean-Marc Harion as president and chief executive officer as of November 10. 

Bellway PLC soared 6.6% to 3,256.0 pence after the UK-based home builder made positive comments about the domestic housing market recovery. 

 

Japan's Nikkei 225 Stock Average Extended 3-Day Rally, Yen Drifts Near 150-Mark 

Stocks in Tokyo advanced for the third day in a row after the yen drifted lower and fell to a five-week low. 

The Nikkei 225 stock average increased 0.6%, and the Topix index decreased 0.2%, after investors returned from a three-day holiday. 

Stocks retained their upward bias in Tokyo as investors surmised that the Bank of Japan is not likely to raise rates in the imminent future. 

Moreover, market sentiment was bolstered following the advance in indexes in overnight trading in New York and the S&P 500 index and the Dow Jones closing at new highs. 

Investors have been on edge over the last five weeks on the worry that the hawkish central bank may continue its aggressive increase in interest rate stance. 

However, market sentiment improved after the recently appointed prime minister, Shigeru Ishiba, urged the central bank to take a gradual approach to raising rates. 

Moreover, officials at the central bank also reiterated the central bank's plan to raise rates in a gradual fashion and avoid excessive depreciation of the yen. 

Investors also reviewed the latest announcement by China's finance minister, Lan Fo'an, over the weekend. 

Finance ministers comments fell short of market expectations, and China-linked stocks headed lower in Tuesday's trading. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average increased 0.8% to 39,910.55, and the broader Topix index increased 0.6% to 2,723.57. 

Seven & I Holdings declined 0.2% to ¥2,287.50, and the company announced a restructuring plan to thwart off a hostile takeover offer from Canada-based Couche-Tard. 

Mitsubishi UFJ Financial rose 2.2% to ¥1,586.50, Sumitomo Mitsui Financial advanced 1.6% to ¥3,216.0, and Mizuho Financial gained 1.5% to ¥3,093.0. 

Tokyo Electron increased 4.4% to ¥26,770.0, Advantest Corp. gained 3.3% to ¥8,061.0, and Disco Corp. advanced 2.2% to ¥38,340.0. 

 

China Indexes Extend Losses Amid Fog of Fiscal Measures 

Benchmark indexes in Hong Kong and mainland China traded down for the second week in a row amid rising uncertainty about the possible fiscal stimulus measures. 

The Hang Seng index decreased as much as 3% and the CSI 300 index dropped 1.5% as investors worried that China's fiscal stimulus measures may fall short of expectations. 

Chinese politicians and policymakers In a familiar pattern of talking up their commitment to bolster economic growth, followed by piecemeal and symbolic gestures to revive economic growth have dented consumer confidence. 

Moreover, finance minister Lan Fo'an hinted at a widely publicized press conference that the country has room to increase its already high debt to finance new fiscal measures. 

Any effort to increase the overall national debt will require approval from China's National People's Congress, a rubber stamp parliament with 2,977 representatives. 

Market sentiment was also weak after China's exports rose at a slower pace of 2.4% and imports advanced 0.6%, indicating weak domestic demand and growing difficulties of increasing shipment amid higher international trade barriers. 

 

China Stock Movers 

The Hang Seng index declined 2.6% to 20,542.95 and the CSI 300 index dropped 1.3% to 3,908.63. 

Property stocks declined for the third session in a row on the lack of clarity of the possible fiscal measures. 

China Vanke dropped 2.4% to HK $7.01, Longfor Group declined 2.7% to HK $13.14, and China Resources Land fell 1% to HK $26.95. 

Banks were also in focus after the latest new loan data fell short of market expectations. 

Bank of China decreased 0.5% to HK $3.82, China Construction Bank dropped 0.6% to HK $6.11, and Industrial and Commercial Bank of China eased 1.4% to HK $4.77.

Technology stocks were under pressure ahead of the upcoming earnings season, and leading tech companies extended losses to 20% from the peak on October 4. 

Alibaba Group decreased 4% to HK $100.90, Tencent Holdings dropped 3.3% to HK $421.20, and Meituan Holding fell 5.8% to HK $172.90.