Wall Street Stumbles as Slumping Chip Stocks Weigh on Market During 2026's Quietest Session

Deep News10-13

An extended selloff in semiconductor shares dragged United States equities lower on Tuesday, leaving the market under pressure ahead of the upcoming earnings season, while traders kept a close watch on inflation figures due later this week that could significantly shape the Federal Reserve's outlook.

The chip sector suffered its longest losing streak since July, weighing on the S&P 500 Index, which slipped 0.1% even as a majority of its constituents advanced. The Nasdaq 100 Index dropped 0.7%. The Dow Jones Industrial Average gained 0.4%. Despite trading volume hitting its lowest level of 2026, the benchmark S&P 500 remained within striking distance of its record high, as investors' confidence in solid corporate results overshadowed elevated oil prices and bond yields.

Wall Street bulls marked the fourth anniversary of the current bull market, with the S&P 500 having climbed nearly 120% from its 2022 low. Market participants are paying close attention to the imminent release of key corporate earnings, as results will be critical to sustaining the rally. Bret Kenwell of eToro noted that earnings resilience helps explain the market's remarkable strength. He added that strong growth is sufficient to keep valuations from becoming stretched, allowing investors to look past rising yields, interest rates, and inflation. Should the next round of quarterly reports remain robust, the bull run could extend through year-end, but disappointing results could trigger a broader pullback, he cautioned.

Chris Larkin of Morgan Stanley E*Trade commented that while this week's inflation data may spark short-term volatility, the new earnings season is poised to play a more significant role in shaping the market's direction into year-end. The earnings period officially kicks off on Tuesday, with Goldman Sachs Group Inc (NYSE: GS), JPMorgan Chase & Co (NYSE: JPM), Citigroup Inc (NYSE: C), and Wells Fargo & Co (NYSE: WFC) all scheduled to report. Bank of America Corp (NYSE: BAC) and Morgan Stanley (NYSE: MS) will follow the next day. Industry research data indicates that third-quarter profits for S&P 500 companies are expected to have grown 25% year over year.

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