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Wall Street closed mixed on Tuesday following strong economic data and a spike in yields of government bonds. Investors remained concerned that the Fed will continue to pursue tight monetary control for a long period. Shares of major chipset manufacturers fell following the decision of the U.S. government to restrict the export of AI chips to China. The S&P 500 and the Nasdaq Composite ended in negative territory while the Dow managed to finish in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 13.11 points to close at 33,997.65. Notably, 20 components of the 30-stock index ended in positive territory, while 10 ended in negative territory. The tech-heavy Nasdaq Composite finished at 13,533.75, sliding 0.3% due to weak performance of large-cap technology stocks.
The S&P 500 fell 0.43 points to end at 4,373.20. Seven out of 11 broad sectors of the benchmark ended in positive territory while four in negative zone. Both the Energy Select Sector SPDR (XLE) and the Materials Select Sector SPDR (XLB) gained 1%.
The fear-gauge CBOE Volatility Index (VIX) was up 3.9% to 17.88. A total of 10.25 billion shares were traded on Tuesday, lower than the last 20-session average of 10.41 billion. Advancers outnumbered decliners on the NYSE by a 1.34-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored advancing issues.
Restriction on AI Chipset Exports
The Department of Commerce said that it will impose more restrictions in coming weeks to prevent exports of advanced AI-enabled chipsets to China. The new rules will further tighten the loopholes of last year’s government directives to ban high-end AI-enabled chipsets to China.
The Department of Commerce reported that retail sales in September increased 0.7% month over month, significantly beating the consensus estimate of 0.3%. Moreover, the metric for August was revised upward to an increase of 0.8% from 0.6% reported earlier.
Year over year, retail sales increased 3.8% in September. Core retail sales (excluding auto) in September increased 0.6% month over month, significantly beating the consensus estimate of 0.3%. The metric for August was revised upward to an increase of 0.9% from 0.6% reported earlier.
The Federal Reserve reported that industrial production increased 0.3% in September in contrast to the consensus estimate of a decline of 0.2%. The metric for August was revised downward to a break-even from an increase of 0.4% reported earlier.
In September, manufacturing rose 0.4%, mining activities also advanced 0.4%. However, utilities declined 0.3%. In third-quarter 2023, the overall industrial production increased 2.5% year over year. In September, capacity utilization was 79.7%, in line with the consensus estimate. The metric for August was revised downward to 79.5% from 79.7% reported earlier.
Spike in Government Bond Yields
On Oct 17, the yield of the benchmark 10-Year U.S. Treasury Note hit 4.8%, its highest since Oct 6. Market participants remained concerned that the Fed will pursue a tight monetary and higher interest rate regime for longer-than-expected period. The ongoing geopolitical conflicts in Middle East also complicated the situation as war between Israel a Palestine terrorist group Hamas has intensified. Higher risk-free market interest rate is detrimental to stock investing.
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Stock Market News for Oct 18, 2023
Wall Street closed mixed on Tuesday following strong economic data and a spike in yields of government bonds. Investors remained concerned that the Fed will continue to pursue tight monetary control for a long period. Shares of major chipset manufacturers fell following the decision of the U.S. government to restrict the export of AI chips to China. The S&P 500 and the Nasdaq Composite ended in negative territory while the Dow managed to finish in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 13.11 points to close at 33,997.65. Notably, 20 components of the 30-stock index ended in positive territory, while 10 ended in negative territory. The tech-heavy Nasdaq Composite finished at 13,533.75, sliding 0.3% due to weak performance of large-cap technology stocks.
The S&P 500 fell 0.43 points to end at 4,373.20. Seven out of 11 broad sectors of the benchmark ended in positive territory while four in negative zone. Both the Energy Select Sector SPDR (XLE) and the Materials Select Sector SPDR (XLB) gained 1%.
The fear-gauge CBOE Volatility Index (VIX) was up 3.9% to 17.88. A total of 10.25 billion shares were traded on Tuesday, lower than the last 20-session average of 10.41 billion. Advancers outnumbered decliners on the NYSE by a 1.34-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored advancing issues.
Restriction on AI Chipset Exports
The Department of Commerce said that it will impose more restrictions in coming weeks to prevent exports of advanced AI-enabled chipsets to China. The new rules will further tighten the loopholes of last year’s government directives to ban high-end AI-enabled chipsets to China.
Following the news, shares of major AI chipset manufacturers, such as, NVIDIA Corp. (NVDA - Free Report) , Intel Corp. (INTC - Free Report) and Broadcom Inc. (AVGO - Free Report) tumbled 4.7%, 1.4% and 2%, respectively. NVIDIA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Strong Economic Data
The Department of Commerce reported that retail sales in September increased 0.7% month over month, significantly beating the consensus estimate of 0.3%. Moreover, the metric for August was revised upward to an increase of 0.8% from 0.6% reported earlier.
Year over year, retail sales increased 3.8% in September. Core retail sales (excluding auto) in September increased 0.6% month over month, significantly beating the consensus estimate of 0.3%. The metric for August was revised upward to an increase of 0.9% from 0.6% reported earlier.
The Federal Reserve reported that industrial production increased 0.3% in September in contrast to the consensus estimate of a decline of 0.2%. The metric for August was revised downward to a break-even from an increase of 0.4% reported earlier.
In September, manufacturing rose 0.4%, mining activities also advanced 0.4%. However, utilities declined 0.3%. In third-quarter 2023, the overall industrial production increased 2.5% year over year. In September, capacity utilization was 79.7%, in line with the consensus estimate. The metric for August was revised downward to 79.5% from 79.7% reported earlier.
Spike in Government Bond Yields
On Oct 17, the yield of the benchmark 10-Year U.S. Treasury Note hit 4.8%, its highest since Oct 6. Market participants remained concerned that the Fed will pursue a tight monetary and higher interest rate regime for longer-than-expected period. The ongoing geopolitical conflicts in Middle East also complicated the situation as war between Israel a Palestine terrorist group Hamas has intensified. Higher risk-free market interest rate is detrimental to stock investing.