Morning Commentary: Chip Rout and Bank Misses Cap Wall Street gains
Mumbai, 14 October: Major Wall Street benchmarks finished flat or slightly negative as investors evaluated the start of the corporate earnings season. Healthcare and manufacturing names like Johnson & Johnson and Caterpillar weighed heavily on the blue-chip Dow, offsetting initial optimism surrounding banking results. The S&P 500 finished essentially flat near 7,805, the Nasdaq fell 0.15%, and the Dow lost 0.35%.
Citigroup fell 5.6%, Wells Fargo fell 3.1%, and JPMorgan fell 0.9% after a rare profit miss, while Goldman Sachs slipped 0.2% despite beating estimates and Johnson & Johnson dropped 5.7%.
Technology and semiconductor stocks experienced selling pressure for a second consecutive session due to concerns over international market developments. Technological advancements from Chinese memory chip manufacturers have heightened worries about long-term US dominance in the sector. The Philadelphia Semiconductor Index fell for a fifth straight session on Chinese memory-chip competition, with Micron down 3.6% and Applied Materials down almost 7%.
Concerns over intensifying international market competition triggered a significant decline in South Korea’s memory chip sector, which subsequently rippled into the U.S. markets.
Brent crude oil prices hovered around $ 106 a barrel, firmly elevated due to persistent geopolitical tensions involving Iran and the wider Middle East. The decline in energy commodities helped provide temporary relief to Treasury yields as market participants pivot their attention to upcoming inflation readings.
September CPI is due today in the USA, with consensus near 3.6% to 3.7% year over year, up from 3.4%, driven by energy costs. It is the last inflation reading before the Fed’s October 27-28 meeting, and a higher number could pressure risk assets.
NY Fed’s Williams said one more hike this year is appropriate, but no further tightening is needed in 2027. Stocks recovered from session lows, Treasuries rallied, and the dollar slipped, and the 10-year yield eased to about 5.18%.
Nifty staged a powerful reversal yesterday, surging 358 points, or 1.60%, to settle at 22,721—its sharpest single-session percentage gain since 12 June 2026. Indian equities rallied as hopes of relief on STT or capital gains tax grew, after the finance minister said the government is open to discussion.
The rupee strengthened for a third consecutive session, gaining 49 paise to close near a one-month high. The move was supported by RBI measures to curb volatility and speculative activity, unwinding of long dollar positions, broader dollar weakness, lower crude prices and the recovery in domestic equities.
Nifty’s close above the 13-day DEMA for the first time since 25 August 2026 marks an early improvement in short-term momentum. The index has also confirmed a higher top and higher bottom on a closing basis, validating a short-term bullish reversal. Resistance is now seen in the 23,100–23,150 zone; a decisive breakout above this band would further strengthen the bullish structure. On the downside, support has shifted higher to 22,580, followed by 22,300. As long as these levels hold, the near-term bias favours buying on dips. Indian equities appear set for a subdued start to the session, weighed down by a soft global backdrop.
Report from Mr. Devarsh Vakil, Head of Prime Research at HDFC Securities
(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)
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