Stocks Settle Lower on Weakness in Chipmakers

Economic Impact - The ongoing US government shutdown is affecting market sentiment and delaying key economic reports, including international trade data and monthly payroll reports [1] - Bloomberg Economics estimates that 640,000 federal workers will be furloughed, potentially increasing jobless claims and raising the unemployment rate to 4.7% [1] Federal Reserve Commentary - Hawkish comments from Federal Reserve officials have negatively impacted stock markets, with Kansas City Fed President Jeff Schmid emphasizing the need to control inflation and Minneapolis Fed President Neel Kashkari warning against drastic interest rate cuts [2][12] Consumer Credit and Corporate Earnings - US consumer credit in August rose by only $0.363 million, significantly below expectations of $14 billion, marking the smallest increase in six months [3] - Over 22% of S&P 500 companies have provided guidance for Q3 earnings that are expected to exceed analysts' expectations, although Q3 profits are projected to rise by only 7.2%, the smallest increase in two years [8] Stock Market Movements - The S&P 500 and Nasdaq 100 initially reached all-time highs but later declined, influenced by a sell-off in chipmakers and AI infrastructure stocks [4][5] - Advanced Micro Devices saw a significant rise of over 3% following a 23% surge the previous day due to increased spending in artificial intelligence [4][17] Gold and Safe-Haven Assets - Gold prices reached a record high after Goldman Sachs raised its 2026 gold price forecast to $4,900 per ounce, driven by ETF inflows and central bank purchases [6] - The ongoing government shutdown and political uncertainties are pushing investors towards safe-haven assets like gold and Bitcoin [6] Company-Specific Movements - Seagate Technology and Lam Research both closed down more than 6%, leading losses in the S&P 500, while Advanced Micro Devices and PayPal Holdings saw gains due to positive analyst upgrades and new product announcements [14][17][18] - Homebuilder stocks faced pressure after Evercore ISI downgraded the sector, with major companies like DR Horton and Lennar closing down more than 3% [16]