Banks fall 2% in the Fed's first hike week as Nasdaq-100 logs a fifth gain

The S&P 500 lost 0.43 points to 7,764.27 at the 4 p.m. ET close, a move so small it reads as a quiet day. It was not. This is the week that started with the Federal Reserve's first rate increase since 2023, a unanimous quarter-point lift to a 3.75%–4.00% funds-rate target. The financials fund AXLF fell 2.0% on its heaviest volume of the past 20 sessions, the energy fund AXLE dropped for a third day, and those two sleeves canceled another advance in semiconductors. Nasdaq-100 fund AQQQ rose 0.8%, its fifth consecutive gain, and closed 0.2% from its 52-week high. The S&P 500 fund ASPY holds 12% in financials; AQQQ holds 0.2%. That construction gap, not a broad market decision, is why one fund finished higher and the other did not.

Six of 11 Select Sector SPDR funds closed up, and 3,451 of 5,569 priced U.S.-listed ETFs finished higher. Equal-weight S&P 500 fund BRSP was as inert as its cap-weighted cousin, up less than 0.1%. The split was by industry, not by company size.

The five-session column runs from the hike through Tuesday.

JPMorgan, Wells Fargo and Schwab

JPMorgan Chase fell 3.4% to $340 and subtracted 0.40 percentage points from AXLF, where it is an 11.8% holding. Wells Fargo dropped 3.9%, Bank of America 3.0%. Charles Schwab, at a 2.2% weight, fell 6.1% and was the fourth-largest drag. Visa lost 2.1%. Regional-bank fund BKRE declined 1.1%, a milder move than the large-cap financial sleeve.

JPMorgan still fell after announcing a $20 billion partnership with Qatar's sovereign wealth fund. Bank of America had already guided third-quarter investment-banking fees to $1.6 billion to $1.8 billion against $2.0 billion a year earlier, a sequential softening Reuters reported last week. Benzinga said traders were rotating into technology Tuesday, citing concern that AI shopping agents could disrupt payments and financial names. The 10-year Treasury yield sits at 4.96%, and Richmond Fed President Thomas Barkin said Tuesday that one increase may not be enough if this year's price shocks persist. Berkshire Hathaway, the fund's largest line at 12%, rose 0.3% and did not offset the banks.

AXLF is up 1.3% this year, distributions included. AQQQ is up 22%. Tuesday extended a gap that has been building all year.

The Dow Jones Industrial Average fell 185 points, or 0.4%, to 51,864. JPMorgan is a 4.0% member of Dow fund ADIA and took 0.14 percentage points off that fund; Goldman Sachs, at 10.8%, subtracted another 0.11. Amgen rose 4.3% and was the Dow's largest positive contributor. A price-weighted index that leans on banks and Caterpillar still closed lower.

Micron, SanDisk and the Nasdaq-100

Semiconductor fund ASMH added 1.9%, a slower session than Monday's 4.0% jump and still the engine of the Nasdaq-100's five-day, 6.1% climb. Micron Technology rose 5.0% and contributed 0.25 percentage points to AQQQ, more than any other holding; it is a 4.9% position there. SanDisk gained 6.8% after Rosenblatt Securities initiated coverage at buy with a $2,400 price target. Advanced Micro Devices rose 1.3% to $624, tagging a 52-week high, and remains above $1 trillion of market value. Nvidia added 0.7%. The technology sector fund AXLK rose 0.7% for a fifth session.

Communications fund AXLC fell 1.1% on some of its heaviest volume in 20 sessions. Meta Platforms, 20% of that fund and Monday's leader, slipped 0.6%. Alphabet Class A lost 1.1%.

All 25 semiconductor ETFs in the desk's theme group closed higher. So did all 17 biotech-and-genomics funds. Viking Therapeutics, a 1.0% holding in biotech fund XBI, rose 36% after the company said a maintenance study of its VK2735 obesity drug showed 22% placebo-adjusted weight loss at week 33.

The Nasdaq Composite added 122 points, or 0.5%, to 27,244. The Nasdaq-100 rose 250 points to 30,732; its session high of 30,770.63 matched its 52-week high. The Russell 2000 gained 0.5% to 2,890.

Crude's fifth decline, and a Hormuz report

West Texas Intermediate last traded at $89.88 a barrel as of 4:40 p.m. ET, down 2.7% from the prior settle. Oil fund BUSO closed 2.8% lower, its fifth consecutive decline and an 11% drop over those five sessions, on some of its heaviest volume in 20 sessions. AXLE fell 1.1%, led by refiners: Valero lost 4.1% and Marathon Petroleum 3.2%. Exxon Mobil, a 23% holding, eked out a 0.2% gain and did not rescue the fund.

Reuters reported a senior Iranian official said Tehran could reopen the Strait of Hormuz within days if the United States eased military pressure and lifted its blockade. CNBC, citing a report that Iran had offered to reopen the waterway within seven days, said that account had not been independently confirmed. Crude has now given back a large share of last week's spike, when WTI traded near $106 around a Saudi pipeline shutdown. President Trump, on the same afternoon, said he backed a ban on diesel exports and that a decision would come "fast, one way or the other." The crude complex still closed lower.

Newmont and gold miners

Materials fund AXLB was the day's best sector fund, up 1.6%. Newmont contributed 0.24 percentage points. Gold-miners fund BGDX rose 3.6%, and all 18 precious-metals-miner ETFs in the desk's theme group closed higher. Gold fund BGLD gained 0.4%; gold futures were at $4,397.20 as of 4:20 p.m. ET, up 0.3%.

The Richmond Fed said Fifth District manufacturing edged down in September, with its composite index dropping to -2 from 4 in August as shipments and new orders turned negative.

A VIX at 14 and an S&P 500 that did not move are a poor description of a 3.6-percentage-point gap between materials and financials. If you hold the cap-weighted index, Tuesday was a rounding error. If you hold banks or oil, the week that started with the hike got more expensive. If you hold the Nasdaq-100, Monday's chip session simply ran into a fifth day.