US stocks: US market slips as chip stocks weigh after bank earnings

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The Dow Jones Industrial Average fell 91.08 points, or 0.18%, to 51,759.47. The S&P 500 lost 16.86 points, or 0.22%, to 7,790.38, while the Nasdaq Composite dropped 79.44 points, or 0.29%, to 27,166.47.

Healthcare stocks were the biggest drag on the S&P 500. Johnson & Johnson fell 4.8% despite reporting a quarterly profit that beat analysts’ estimates.

Financial stocks also witnessed a dip. Wells Fargo dropped 2.5% after its net interest income fell short of expectations, while JPMorgan Chase swung between gains and losses after a rare earnings miss.

Citigroup declined 1.8%, while Goldman Sachs rose about 1% after both banks beat estimates. UnitedHealth reversed earlier gains to trade marginally lower.

Also Read | US banks post strong profits, but inflation and rate risks cloud outlook

Changes in the yield curve also weighed on bank stocks, according to Kathleen Brooks, research director at XTB. A rise in longer-term yields relative to shorter-term yields can signal growing concern about future credit risks.

“Investors tend to price this in ahead of time, which is why US banks with large retail units like JPMorgan and Citi are struggling,” Brooks was quoted as saying by Reuters.

Expectations for a strong earnings season have helped support the broader market despite geopolitical tensions, rising bond yields and concerns about inflation.

Technology stocks declined, weighing on both the S&P 500 and Nasdaq. Chipmakers led the losses after reports of technological advances by Chinese memory-chip company CXMT.

The increased competition from China could take some business from established chipmakers, but is unlikely to displace them entirely, Robert Pavlik, senior portfolio manager at Dakota Wealth, was quoted as saying by Reuters.

Micron Technology fell 4.5%, while data-storage companies Western Digital, Seagate and Sandisk lost between 2% and 5%. The broader semiconductor index dropped 1.5% in what Pavlik described as a rush of profit-taking.

Elsewhere, Meta rose 3%, supporting the communication-services sector and limiting the S&P 500’s losses. A similar gain in Salesforce helped contain pressure on the Dow.

Oil prices declined as traders weighed the prospect of additional diesel supplies from Russia against risks in Saudi Arabia.

Elevated crude prices have added to inflation concerns and pushed bond yields to multiyear highs. However, recent US data showing weaker job growth and softer-than-expected inflation have reduced expectations of an imminent interest-rate increase.

Investors now turn their attention to this week’s consumer and producer inflation reports, as well as retail-sales data. Remarks from Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins are also due later on Tuesday.

Among individual stocks, Bumble surged 56% to a one-year high after the dating-app operator agreed to go private in a $1.3 billion deal. Domino’s Pizza fell 4.4% after lowering its full-year sales outlook.

Declining stocks outnumber advancing issues by 1.27 to 1 on the New York Stock Exchange and by 1.87 to 1 on the Nasdaq.

The S&P 500 recorded 13 new 52-week highs and three new lows, while the Nasdaq Composite posted 28 new highs and 257 new lows.