U.S. equities edge lower as earnings, rates, and oil diverge; Philadelphia Semiconductor Index extends losses to five days.
Growing consensus suggests fears over CXMT are excessive; U.S. long-term yields fall to 5.21% while overnight futures climb 1.71%.
Major Market Trends
① CXMT fears persist, but counter-arguments gain traction.
Volatility remains elevated in the memory chip sector, driven by reports of technological progress at CXMT and recent remarks from the Broadcom CEO regarding AI investments.
The Philadelphia Semiconductor Index has fallen for five consecutive trading sessions, dragging memory stocks like Micron and SK hynix lower.
Conversely, NVIDIA, Broadcom, and AMD have seen gains, highlighting a growing divergence between the broader AI semiconductor space and traditional memory stocks.
International analysts are increasingly signaling that concerns regarding CXMT are overstated.
Reliance has noted that CXMT has yet to prove its production capacity or yields, and given its low market share, the recent stock decline is driven more by psychological factors than fundamentals.
Analysts point out that CXMT’s technology is currently focused on DDR5, not High Bandwidth Memory (HBM), and that South Korean firms retain a clear competitive edge in the HBM market.
Firms such as Cantor Fitzgerald and BMO have also suggested that the recent sell-off in memory stocks has been excessive.
② Long-term yields retreat to 5.21%; oil climbs back toward $94.
While short-term U.S. Treasury yields rose, long-term yields declined.
New York Fed President John Williams suggested that one additional rate hike could reduce the need for further tightening next year. Meanwhile, Fed Governor Christopher Waller noted that rising long-term yields are effectively substituting for monetary policy, curbing demand in interest-sensitive sectors like housing and automotive.
Following these remarks, long-term yields eased, helping the stock market recover some of its earlier losses. The 10-year Treasury yield settled at 5.21%.
International oil prices, which were weak during early trading, rebounded to close at $94.14 per barrel following reports of mutual attacks on oil-related facilities between Saudi Arabia and Houthi forces.
③ Earnings season off to a steady start; focus shifts to forward guidance.
Third-quarter earnings from companies like UnitedHealth, Johnson & Johnson, and Domino's Pizza have been relatively stable.
In the banking sector, results were mixed: Goldman Sachs and Citi beat market expectations, while JPMorgan and Wells Fargo fell short on sales revenue.
However, the sector remains buoyed by the fact that loan-related losses are being managed effectively despite high interest rates.
As earnings beats have become standard, the market is shifting its focus away from simple surprises toward whether growth trajectories can be sustained into next year.
Key areas to watch include the sustainability of AI investments by Big Tech firms and the actual monetization of those investments.
Market Perspective
The KOSPI has fallen for five consecutive trading days, shedding over 1,000 points during this period. The market has been pressured by a confluence of rising interest rates, volatile oil prices, and a string of negative news regarding the semiconductor industry, exacerbated by the end of share buyback programs by Samsung Electronics and SK hynix.
From the controversy surrounding OpenAI's revenue to reports of production cuts for iPhone 18 components, technical advancements at CXMT, and comments by the Broadcom CEO, the semiconductor sector has been hit by a rapid succession of headwinds. It appears that market sensitivity to news has become far more acute than changes in actual earnings forecasts.
As noted, there is growing international pushback against the alarmism surrounding CXMT. Their production yields and large-scale manufacturing capabilities remain unproven, and their current technological focus is on DDR5 rather than HBM. The likelihood of Chinese chips being deployed in U.S. AI data centers in the near term remains limited. Thus, it is increasingly likely that this decline reflects unstable investor sentiment rather than a fundamental shift in the industry.
The short-term drawdown has also become quite significant. While the KOSPI has breached several key support levels, it saw a rebound in dollar-denominated terms near its July support level yesterday. The next one or two trading sessions will be critical in determining the market's direction following this sharp decline.
Today's Checkpoints
Semiconductors: Watch for international counter-arguments regarding CXMT and potential rebounds for Samsung Electronics and SK hynix.
Interest Rates: U.S. 10-year yield fell to 5.21%; monitor whether long-term rates stabilize.
Oil Prices: Will crude oil continue its ascent past the $94 level amid the Saudi-Houthi conflict?
Supply & Demand: The tug-of-war between foreign selling and institutional buying following the conclusion of corporate share buybacks.
Stocks: Watch for signs of rebound in recently strong sectors, policy-related stocks, and oversold large-cap shares.
Key Indicators
Dollar Index: 102.20 (-0.38%)
Crude Oil: $94.14 (+0.43%)
Volatility Index (VIX): 15.27 (+0.39%)
U.S. 10-year Treasury Yield: 5.21%
MSCI Korea Index: -2.09%
Overnight Futures: +1.71%
Source: Sijangman's Stock Story (t.me/shmstory)
YouTube: Sijangman TV www.youtube.com/@blueoak1004
This article is a reorganization of a Telegram post by "Sijangman's Stock Story," published with the author's consent. All content may contain errors and does not constitute a recommendation to buy or sell; it should not be used as the basis for investment decisions. The contents of this post cannot be used as legal evidence in any case.
