Dow Drops 170 Points at Midday as Chip Selloff Deepens, Shrugging Off Goldman's Blowout Quarter

Dow Drops 170 Points at Midday as Chip Selloff Deepens, Shrugging Off Goldman's Blowout Quarter

Dow Erases Its Opening Rally by Midday

The Dow jumped 242.4 points at the bell to 52,092.99 before retreating. By 12:23 p.m. ET, according to Reuters, the Dow was down 173.96 points, or 0.34%, at 51,676.77; the S&P 500 lost 9.38 points to 7,798.04; and the Nasdaq shed 38.24 points to 27,207.66. Caterpillar and Honeywell were the biggest drags on the blue-chip index. Monday's close was 51,850.55 on the Dow, 7,807.24 on the S&P 500 and 27,245.90 on the Nasdaq Composite.

Goldman Beats Estimates by Nearly 30%

Goldman Sachs delivered the strongest print of the morning. The firm reported third-quarter net revenues of $18.68 billion and net earnings of $5.29 billion, or $17.01 a share, with an annualized return on common equity of 18.7%. Analysts had penciled in roughly $13.09 a share, so the earnings beat was close to 30%. Revenue rose 23% year over year, the second-highest quarterly total in the firm's history; net earnings climbed 29% from $4.10 billion, or $12.25 a share, a year earlier.

Equities Trading Jumped 72%

The trading desks carried the quarter. Equities revenue hit $6.44 billion, up 72%, with the equities financing line — prime and portfolio financing — rising 96%. Investment banking fees increased 21% to $3.22 billion, and advisory revenue set a record at $1.65 billion. Fixed income, currencies and commodities were essentially flat at $3.47 billion; asset and wealth management rose 14% to $5.05 billion. The weak spot was platform solutions, which fell 72% to $170 million on net markdowns tied to the Apple Card loan portfolio. CEO David Solomon called it a "complicated operating environment."

Goldman's Stock Popped, Then Faded

Goldman shares rose as much as 4.2% premarket to around $924.56 before giving back almost the entire move. By 12:23 p.m. ET the stock was up only about 0.5%, and at 12:47 p.m. it traded at $899.60, a 0.63% gain. The stock is still more than 20% below its 52-week high of $1,153.99.

JPMorgan Posts a Rare Profit Miss

JPMorgan Chase, by contrast, stumbled. Net income rose 6% to $15.3 billion, but earnings per share of $5.57 missed the $5.90 consensus — the bank's first profit miss since the fourth quarter of 2023. Fixed-income trading revenue fell 4% to $5.4 billion, its first decline in more than two years, while equities revenue surged 49% to about $5 billion. Wells Fargo earned $1.87 a share, ahead of estimates, but revenue and net interest income both came in light, sending the stock down 2.5%.

Chips Fall for a Fifth Straight Session

Semiconductors were the real weight on the tape. The Philadelphia Semiconductor Index dropped 1.5%, its fifth consecutive decline and its lowest level in about four weeks. Micron fell 4.5% — a fourth straight daily loss and its lowest since September 16 — while SanDisk slid 4.3%, Seagate 5.9% and Western Digital 5.8%; Nvidia, AMD, Marvell, Broadcom and Intel were all lower. Robert Pavlik, senior portfolio manager at Dakota Wealth, called it "rush-for-the-door profit-taking," while cautioning that Chinese competition would not take all of the incumbents' business.

CXMT's 4F² Design Lit the Fuse

The trigger came from China. ChangXin Memory Technologies president Cao Kanyu told a chiplet conference in Shanghai that the company had made "key progress" on a 4F² memory-cell architecture and plans to ship a server DDR5 RDIMM based on it by the end of 2026. Mainstream DRAM uses a 6F² structure; 4F² shrinks the cell footprint by roughly a third, allowing about 50% more cells in the same area. Samsung and SK Hynix are pursuing the same design but are generally seen reaching market in 2028 or later. Counterpoint Research puts CXMT's DRAM share at 10% in the second quarter, up from 4% a year earlier.

Kospi Plunges 5.5% as Korea's Leaders Sink

Asia absorbed the first blow. South Korea's Kospi closed down 5.5% after falling more than 7% at one point, with SK Hynix off 10% and Samsung Electronics down 7.4%, both at their lowest since August. Japan's Kioxia dropped nearly 13.3%, and CXMT's own Shanghai-listed shares ended 2.8% lower. Broadcom CEO Hock Tan had already rattled the sector on Monday in Singapore, comparing many AI investors to casino gamblers.

Healthcare Reversals Drag the Dow

The Dow's damage was not only about chips. Healthcare was the biggest drag on the S&P 500: Johnson & Johnson fell 6.8% despite topping profit estimates, after a talc-related charge cut reported EPS to $0.09, and UnitedHealth surrendered nearly all of a 5% opening gain to trade 4.3% below its open even after raising full-year adjusted guidance to at least $20.50 a share. Offsetting some of that, Apple hit a record high and Microsoft rose 0.9%. The 10-year Treasury yield eased to 5.22% from 5.24%, and the VIX sat at 15.31 — a repricing of one industry, not a panic.

CPI and the Rest of Bank Earnings Come Next

Wednesday brings the September consumer price index, with economists expecting headline inflation of 3.6% year over year and a 2.5% core reading. Bank of America, Morgan Stanley and BlackRock report the same day, closing out the six largest lenders. Thursday's slate includes retail sales, producer prices and TSMC, plus Fed Chair Kevin Warsh's remarks in Bangkok. The KBW Bank Index is already down about 12% from its mid-August peak, so the question is whether strong earnings can keep offsetting higher borrowing costs.