Chip Stocks Lift Nasdaq, Apple Drags Dow, AMD Jumps After the Bell

Chip stocks bounced on Tuesday and pulled the Nasdaq and the S&P 500 higher, even as most stocks in the S&P 500 fell.

After the close, Advanced Micro Devices forecast fourth-quarter revenue of about $17 billion, above analysts’ estimates, and its shares jumped about 8% in extended trading.

Midterm election results come in overnight.

The Nasdaq Composite rose 0.83% on Tuesday to 25,372.01, and the S&P 500 rose 0.36% to 7,568.92. The Dow Jones Industrial Average fell 0.38% to 51,786.72, pulled down by Apple. The Invesco S&P 500 Equal Weight ETF, RSP fell 0.33%, indicating that the day’s gains came from a few large companies.

Four of State Street’s 11 sector ETFs finished higher, and seven finished lower.

A rough month for chip stocks

Tuesday’s bounce did little to undo October’s losses. From the Oct. 27 close, five sessions back, Invesco QQQ Trust, Series 1, QQQ, which tracks the Nasdaq-100, was still down 5%. iShares Semiconductor ETF, SOXX, rose 2.5% on Tuesday but was down 9% over the same five sessions after falling 17% in October.

RSP, the equal-weight fund, was up 0.8% over the five sessions. In October, RSP beat the S&P 500 by the widest margin since 2009 as investors rotated out of tech issues and bought energy, staples, utilities and health care stocks.

Nvidia rose 2.3% after falling in each of the four sessions before Tuesday. Microsoft rose 2.7%, Broadcom rose 3.1%, and Advanced Micro Devices rose 3.7% before its report.

AMD’s fourth-quarter outlook

At 4:15 p.m. ET, Advanced Micro Devices said it expects fourth-quarter revenue of about $17 billion, plus or minus 3%. The company said the midpoint of that range is about 66% above a year earlier.

Third-quarter revenue was $13.4 billion, up 45% from a year earlier, and adjusted earnings were $2.09 a share. Data-center revenue was a record $8.5 billion, up 97%. CNBC, citing LSEG, said the $2.09 compared with $1.95 expected, and that the $17 billion outlook topped a $16.2 billion average estimate.

The shares had already risen 3.7%, to $483.90, in the regular session, and traded about 8% higher after hours.

AMD was one of the biggest gainers this session. Lisa Su, its chair and chief executive, said demand for its Instinct graphics processors and EPYC server chips “continued to strengthen,” and that she expects growth to accelerate further in the fourth quarter.

Apple falls despite strong earnings, margins

Apple fell 1.9%, to $331.90. The quarter it reported Monday was a strong one. Revenue was $114.5 billion, up 12% from a year earlier, and diluted earnings were $2.10 a share, up 14%, Apple said.

Gross margin was 47.9%, and about 1 percentage point of that was tariff refunds, money the company got back on tariffs it had already paid.

Kevan Parekh, Apple’s chief financial officer, said on Monday’s call, “We expect gross margin to be between 45% and 46%. This includes primarily the impact of higher memory costs, as well as some costs related to the ramp of Siri AI.” Siri is Apple’s voice assistant.

Consumer staples stocks lose ground

Consumer staples were the weak spot. State Street Consumer Staples Select Sector SPDR ETF, XLP, fell 2.1% after Sysco, the food distributor missed quarterly sales estimates and dropped about 9.3%. The company cited soft restaurant traffic and higher fuel costs. Staples stocks had been among October’s winners as investors moved out of technology.

Shopify fell 8.7% after missing estimates for the gross profit on its subscriptions and for the value of goods sold on its platform, CNBC reported. Revenue of $3.74 billion was just under the $3.75 billion estimate from LSEG that CNBC cited.

Treasuries and interest rates

Bond prices fell and treasury yields rose. The 10-year yield, a benchmark for mortgage rates, climbed about 6 basis points to about 4.95%, and the two-year yield rose about 4 basis points to about 4.62%. A basis point is one-hundredth of a percentage point.

The increase in yields came as voting began, while investors sorted through a week of economic data and watched tensions in the Middle East, CNBC reported.

Job openings beat estimates

September job openings rose to 7.52 million, well above the roughly 7.15 million economists expected. The Labor Department called the change statistically small.

Oil prices fall after U.S. strikes

Oil fell for a second day. Brent crude, the global benchmark, settled down $1.17 at $103.60 a barrel. Prices rose early after U.S. forces struck Iran’s Qeshm Island, at the mouth of the Strait of Hormuz, late Monday. They then fell on hopes for a diplomatic end to the eight-month war. Brent dropped more than 7% on Monday after the U.S. and Iranian presidents signaled they were open to talks.

Coming up this week

Midterm votes are counted tonight. Prediction markets gave Democrats nearly a 75% chance of winning the Senate, and some investors said a Democratic sweep of both chambers could weigh on stocks Wednesday.

The Treasury announces its quarterly borrowing plans Wednesday, and the October jobs report is due Friday.