Chip Rout Deepens as Semiconductors Sink 2.7%, but the Dow Edges Higher Ahead of Bank Earnings

Stocks finished mixed Monday, Oct. 12, as continued weakness in semiconductor stocks offset gains across much of the broader market. The Dow Jones Industrial Average rose 0.4%, while the S&P 500 fell 0.1%, the Nasdaq Composite fell 0.4% and the Russell 2000 fell 0.5%. The S&P MidCap 400 also finished 0.4% lower.

The session was quiet on the surface. Stocks traded in relatively narrow ranges, with few major headlines and attention on the upcoming third-quarter earnings season. Underneath, the split was sharp: the PHLX Semiconductor Index fell 2.7% and AI-infrastructure names such as Lumentum and Ciena dropped almost 10%, while energy, communication services, health care and financials advanced. Crude oil rose 2.0%, and the Treasury market was closed for Columbus Day.

The numbers, by the close

Year to date, the Nasdaq Composite is up 17.2%, the S&P 500 14.1%, the Russell 2000 12.6%, the S&P MidCap 400 10.6% and the Dow 7.9%.

ETF scoreboard

Semiconductor, cybersecurity and equal-weight tech funds led the declines, while energy and financials led the gains. The equal-weight Nasdaq 100 fund (QQEW, -1.06%) fell more than the cap-weighted QQQ (-0.70%), a sign the weakness was not confined to the biggest names. SOXX (-2.60%) also fell harder than SMH (-2.05%), which is consistent with differences in how the two funds weight their holdings.

VNQ, UUP, EFA, and EEM are not shown; their closes could not be verified for this session.

Market temperature

Dispersion was the story of the session. Lumentum and Ciena each fell almost 10%, Bloom Energy lost 6.47% and Sandisk lost 5.97%, yet the S&P 500 closed down just 0.06%. Moves of that size in a handful of stocks, absorbed almost entirely by gains elsewhere, show how much leadership has narrowed around AI-linked technology.

Rates, oil, gold, and crypto

With the Treasury market closed for Columbus Day, there was no official yield move to report, and the long-bond fund TLT finished little changed. The more active macro asset was crude, which rose after the Saudi-Houthi conflict escalated. Gold futures and the gold ETF both slipped about 0.6%, while the bitcoin ETF edged higher.

Sectors: leaders and laggards

Leadership rotated away from technology and toward energy, communication services and defensive groups. Information technology was the largest drag, while higher oil prices weighed on consumer discretionary.

The day's market-moving stories

1. Semiconductors sell off again

The PHLX Semiconductor Index fell 2.7%, and the SOXX and SMH funds lost 2.60% and 2.05%. Nvidia (NVDA) slipped 1.29% to $226.32. Intel (INTC) was also down about 3% late in the session despite unveiling new data center GPU and Xeon rack details at the OCP Global Summit. The information technology sector, down 0.9%, was the biggest drag on the market.

2. China's CXMT adds to memory-chip pressure

Memory stocks faced more pressure after a CNBC report that China's ChangXin Memory Technologies (CXMT) plans to begin producing next-generation memory chips, potentially intensifying competition with U.S. and South Korean manufacturers. Micron (MU) fell 3.88% to $989.04 and Sandisk (SNDK) fell 5.97% to $1,487.33.

3. AI-infrastructure names take heavy losses

The selling extended to other parts of the AI buildout. Lumentum (LITE) fell 9.78% to $995.41 and Ciena (CIEN) fell 9.99% to $404.86, both among the S&P 500's worst performers. Data center power-related names Bloom Energy (BE) and Generac (GNRC) fell 6.47% and 2.92%, weighing on industrials, which finished down 0.1%.

4. Oil climbs on a Saudi-Houthi escalation

WTI crude settled $1.85 higher, up 2.0%, at $93.77 a barrel after the conflict between Saudi Arabia and Houthi forces escalated over the weekend. President Trump indicated the U.S. could become involved, adding to geopolitical concerns. The energy sector gained 1.5%, extending its strong performance so far this month.

5. Meta leads communication services higher

Meta Platforms (META) rose 3.38% to $742.96. The company unveiled its Muse Wonder AI models, and a news report said Mark Zuckerberg hinted at a new “Watermelon” model in a recent interview. Alphabet (GOOG) added 0.32% and wireless carriers recovered part of Friday's losses, lifting the communication services sector 1.1%.

6. Apple gains while Amazon slips

Apple (AAPL) rose 1.29% to $340.97, one of the few large technology names to advance. Amazon (AMZN) fell 1.11% to $259.53 after a Wall Street Journal report that the company is discussing a roughly $7 billion acquisition of AI startup Decart.

7. Chipotle drops as Starbucks rules out a deal

Chipotle Mexican Grill (CMG) fell 3.75% to $30.40 after CNBC reported that Starbucks is not considering an acquisition of the restaurant chain, contradicting reports from last week. Starbucks (SBUX) rose 1.69% to $92.28. Higher oil prices also weighed on the consumer discretionary sector, which finished down 0.7%.

8. Analyst and earnings catalysts lift eBay and Lamb Weston

eBay (EBAY) gained 2.19% to $114.65 after Morgan Stanley named it a Top Pick and raised its price target to $132 from $127, citing growth in Live Commerce. Lamb Weston (LW) rose 4.83% to $50.18 on continued buying after last week's better-than-expected earnings and increased guidance, helping consumer staples.

9. Banks report Tuesday as housing finance names slide

Four big banks report quarterly results Tuesday: JPMorgan Chase (JPM, +0.45% to $334.49), Citigroup (C, +1.77% to $131.93), Goldman Sachs (GS, -0.14% to $894.03) and Wells Fargo (WFC, -0.30% to $83.30). Separately, Fannie Mae and Freddie Mac shares were down more than 12% at midday after Mizuho cut its price targets on fading privatization hopes.

10. A quiet tape with no data and a closed bond market

There was no economic data of note, and the U.S. Treasury market was closed for Columbus Day. Trading stayed in relatively narrow ranges, with a lack of major headlines and anticipation of third-quarter earnings season contributing to the subdued action. Beneath the surface, weakness in heavily weighted technology stocks contrasted with strength across several other sectors.

Movers below the headlines

Single-stock moves were larger than the index moves, and most traced to specific catalysts:

Earnings spotlight

No major companies reported results that moved the broad market today. The focus is on the banks, which kick off the heart of third-quarter earnings season on Tuesday.

Key market & macro risks to watch

What to watch next

The takeaway

• A flat index hid a big split. The Dow gained 0.4% while the Nasdaq fell 0.4% and semiconductors dropped 2.7%, with energy, communication services and health care providing the offset.
• AI-infrastructure stocks were the pressure point. Memory, optical and power-equipment names fell sharply, with Lumentum and Ciena each down almost 10%.
• The week turns to banks and data. JPMorgan, Citigroup, Goldman Sachs and Wells Fargo report Tuesday, followed by inflation and retail sales data.