US STOCKS-Wall St subdued in choppy trade after big bank earnings, chips slide
By Tharuniyaa Lakshmi and Purvi Agarwal
Oct 13 (Reuters) - Wall Street's main indexes were muted in choppy trading on Tuesday as chip stocks came under selling pressure again while investors parsed a mixed bag of quarterly results, including those from big US banks.
On the S&P 500, healthcare shares .SPXHC were the biggest drags, with Johnson & Johnson JNJ.N losing 4.8% despite topping quarterly profit estimates.
Financials .SPSY added to the gloom as Wells Fargo WFC.N fell 2.5% after its net interest income missed estimates and JPMorgan Chase JPM.N swung between gains and losses following a rare profit miss.
Citigroup C.N dipped 1.8% but Goldman Sachs GS.N rose about 1% after both topped estimates. Health insurer UnitedHealth UNH.N also fell 0.2%, reversing course.
The flattening yield curve — where longer-term returns rise faster than shorter-term, in a sign of rising credit risks in the future — weighed on banks, Kathleen Brooks, research director at XTB, said.
"Investors tend to price this in ahead of time, which is why US banks with large retail units like JPMorgan and Citi are struggling."
Hopes of a strong earnings season had been propping up the broader market amid geopolitical tension, surging bond yields and inflation worries.
At 10:20 a.m. ET, the Dow Jones Industrial Average .DJI rose 9.14 points, or 0.02%, to 51,859.69, the S&P 500 .SPX lost 6.36 points, or 0.08%, to 7,800.86 and the Nasdaq Composite .IXIC fell 32.52 points, or 0.12%, to 27,213.38.
Information technology stocks slid, pressuring the S&P 500 and the Nasdaq. Chip stocks bore the brunt after reports of technological advances by China's CXMT.
Competition from China "might take some business away from some of the more well-known companies, but I don't think it's going to take all the business away," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
Memory chipmaker Micron Technology MU.O dipped 4.5% while data storage companies Western Digital WDC.O, Seagate STX.O and Sandisk SNDK.O dropped between 2% and 5%. The broader chips index .SOX lost 1.5%, in what Pavlik referred to as "rush-for-the-door profit-taking."
A 3% rise in Meta META.O propped up the communication services sector .SPLRCL, limiting losses on the S&P 500. Salesforce's CRM.N 3% gain contained the Dow's slip.
Meanwhile, oil prices fell as traders weighed additional diesel supplies from Russia against risks in Saudi Arabia. O/R
Elevated crude prices have fueled inflation concerns and pushed bond yields to multi-year highs, but recent US economic data pointing to weaker job growth and lower-than-expected inflation rise have curbed bets on imminent interest rate hikes.
This has brought the September reading of consumer and producer prices and retail numbers, slated for this week, under greater scrutiny. Comments from regional Fed presidents Thomas Barkin and Susan Collins will be in focus later in the day.
Among other stocks, Bumble BMBL.O jumped 56% to a year-high after the dating-app operator agreed to go private in a $1.3 billion deal.
Domino's Pizza DPZ.O lost 4.4% after scaling back its full-year sales outlook.
Declining issues outnumbered advancers by a 1.27-to-1 ratio on the NYSE and by a 1.87-to-1 ratio on the Nasdaq.
The S&P 500 posted 13 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 28 new highs and 257 new lows.