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Wall Street: chips lift Nasdaq 0.83% as Apple drags the Dow; AMD and Arista jump after the close
The Nasdaq rose 0.83% to 25,372.01 on 3 November as chip stocks rebounded from a steep October selloff, and the S&P 500 gained 0.36%. Apple fell 1.9% on a weaker margin outlook and pulled the Dow down 197 points. AMD and Arista surged after hours on strong results.
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5 min
US stocks ended Tuesday 3 November mixed, with a rebound in chip makers lifting the Nasdaq while a fall in Apple dragged on the Dow, on the day Americans voted in the midterm elections. The Nasdaq Composite rose 0.83% to 25,372.01 from 25,164.36 on Monday. The S&P 500 gained 0.36% and ended a three-day losing streak. The Dow Jones Industrial Average fell 197 points, or 0.38%, with Apple the main weight. After the close, AMD and Arista Networks reported results that sent their shares sharply higher, and Amdocs fell by almost half.
The market reaction to the vote itself was muted. Stock futures turned negative as the polls began to close, with S&P 500 futures down about 0.6% in the evening. Betting markets had put the chance of Democrats taking the Senate at about 90% and the House at about 97%, and the television networks' election desks had not called any races at the close of trading. Some on Wall Street fear that a large Democratic Senate majority could weigh on artificial intelligence stocks on Wednesday, because investors worry about tighter limits on data centres.
Why chips bounced
The rebound followed a heavy October. The Nasdaq fell about 5.2% for the month and the main semiconductor exchange-traded fund lost roughly 17%. One calculation puts the value lost across chip and memory companies at about $3.7 trillion since 6 October. The trigger for the latest leg down was a disappointing outlook from Intel, whose shares fell on 30 October and again on 2 November, pulling AMD lower on both days. Behind that was a broader worry about how much money is being spent on AI infrastructure and about the debt taken on by the new cloud companies that rent out computing power.
On Tuesday the semiconductor index rose roughly 2.6% to 3%. At the close, AMD was up more than 3%, Broadcom 3%, and Micron and Nvidia each more than 2%. The reports differ on how long Nvidia's earlier losing streak had been, with sources citing between two and four sessions, which is a reminder that rebound days after a sharp fall are often short-term and not a change of direction. Technology was the best of the 11 sectors, up about 1.4% during the afternoon, even though more S&P 500 stocks were falling than rising: 291 against 211 at 2:17 pm Eastern time. The index gain therefore rested on a narrow set of large technology companies.
Apple's day
Apple fell 1.9% at the close, a loss of about $94 billion in market value, after it reported on Monday evening. The company posted record September-quarter revenue of $114.48 billion against a consensus of $113.39 billion, and earnings of $2.10 a share against $1.99 expected, which included a benefit of five cents from tariff refunds. iPhone revenue was $57.58 billion, ahead of the $56.54 billion estimate. iPad sales and Greater China revenue missed.
The sell-off was about the outlook. Apple guided gross margin for the December quarter to 45% to 46%, down from 47.9% in the September quarter, which had included about one percentage point from tariff refunds that are not expected to recur. The main reason was memory prices. Chief executive John Ternus called the memory cost situation "unprecedented" and said costs would stay high this quarter and beyond, with price rises and inventory carried in offering only limited relief. The company also projected services revenue growth of 8% to 9% for the coming quarter, below the roughly 10.7% analysts had expected, citing currency, regulation and continued weakness in mobile gaming. The stock had already dropped 1.8% on Monday and fell as much as 2.9% after hours to $328.60. It is still up more than 20% this year.
There is an irony in the pattern. The memory shortage that squeezes Apple's margin is the same AI-driven demand that lifts chip makers, so one day's winners and losers are two sides of the same trade.
Oil, yields and the after-hours results
Brent crude settled 1.12% lower at $103.60 a barrel on reports of progress towards a United States and Iran deal, after dropping more than 7% on Monday. The yield on the 10-year Treasury edged up to about 4.91%, which keeps pressure on valuations of companies whose earnings are expected far in the future.
The after-hours results shifted the mood. AMD reported record third-quarter revenue of $13.4 billion, up 45%, with data centre sales rising 97% to $8.5 billion, and guided to about $17 billion for the fourth quarter. Its shares rose about 5%. Arista Networks reported revenue up 58.5% to about $3.66 billion, above its own forecast of $3.3 billion, and its shares gained 9.48%. Amdocs fell 45% after it guided to a decline in revenue linked to a dispute with T-Mobile.
For investors, the sequence offers a useful lesson. The October selloff was driven by doubts about how long AI spending can keep growing, and the first answers, from AMD and Arista, point to demand still rising. But the worry about financing, the cost of memory and the political risk of tighter rules on data centres has not gone away. Wednesday's session will show how much of Tuesday's rebound survives the election results and the next round of company guidance.
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5 min
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