The Nasdaq Composite closed lower on Tuesday as semiconductor stocks continued their downward trend, paralleling mixed earnings reports from major U.S. banks, including Citigroup. The PHLX semiconductor index fell 0.23%, marking its fifth consecutive session of losses, following comments from Broadcom CEO Hock Tan, who described recent investment trends in the sector as reminiscent of "casino gambling." Additionally, advancements from Chinese memory chip manufacturer CXMT raised competitive concerns for U.S. companies.
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Shares of Micron Technology decreased by 3.6%, while Applied Materials fell nearly 7%. Despite these losses, Broadcom saw a rise of 0.7%. In banking, Citigroup's stock dipped by 5.6% and Goldman Sachs fell 0.2%, even though both institutions exceeded profit expectations. Wells Fargo declined 3.1% after reporting net interest income below estimates, and JPMorgan Chase closed 0.9% lower after a rare profit miss.
Apple's stock reached an intraday peak of $348.15 before closing up 0.1% at $341.27, giving the tech giant a market value of $4.98 trillion. According to LSEG data, analysts project that S&P 500 companies will see an earnings surge of over 30% in the third quarter, with much of the momentum attributed to AI-related technology firms. Market participants are balancing these positive earnings expectations against concerns about the U.S. conflict with Iran, rising bond yields, and inflation driven by high oil prices.
Jake Dollarhide, CEO of Longbow Asset Management, noted that many investors are relieved that the markets may start focusing on earnings rather than external pressures like high interest rates and oil prices. The S&P 500 slipped by 0.02%, closing at 7,805.45 points, while the Nasdaq was down 0.15% at 27,204.38 points, and the Dow Jones Industrial Average fell 0.35% to 51,670.10 points.
Despite the S&P 500 rallying 14% in 2026, primarily due to AI technology stocks, the median stock within the index has only gained less than 5%, with over 200 components down for the year. The index currently trades at under 19 times expected earnings, its lowest level since 2023, reflecting strong corporate earnings expectations. The PHLX chip index has tumbled over 8% in the last five days, yet it remains up by more than 70% year-to-date. In sector performance, the S&P 500 healthcare index fell by 1.3%, with Johnson & Johnson down 5.7% despite surpassing earnings estimates. Meanwhile, shares of Bumble surged nearly 57% after the dating app announced a $1.3 billion deal to go private, while Domino's Pizza dropped 4.8% after reducing its full-year sales outlook. Overall, advancing issues slightly outnumbered declining ones in the S&P 500 with a 1.1-to-one ratio.