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Limited spots available, first come first served. Let us journey together toward sustainability! [Click to Register] The selloff in chipmakers extended into a second consecutive trading day, weighing on global stock markets. Meanwhile, traders are preparing for a wave of earnings reports from major Wall Street banks, marking the official start of the busiest stretch of the U.S. earnings season. As technology-heavy markets in Asia and the U.S. suffered sharp selling, investors flocked to government bonds in search of safety. As of press time, Dow futures were up 0.39%, S&P 500 futures were down 0.08%, and Nasdaq futures were down 0.70%. An exchange-traded fund tracking chip stocks was on track for a sixth straight session of declines. The MSCI All-Country World Index fell 0.14%, while the MSCI Asia Pacific ex-Japan index dropped more than 2% to its lowest level since late July, led by Asian AI chipmakers. Memory chip giants Samsung Electronics and SK Hynix suffered heavy selling, dragging Asia's benchmark stock index to its lowest since August. Since June, both SK Hynix and Samsung Electronics shares have declined. Over the past four years, investors have continuously chased the AI boom as massive investment in the sector drove corporate profits and economic growth. However, concerns have persisted about excessive concentration of investment and whether the enormous capital expenditure can generate sufficient returns in time. In South Korea, one of the core markets of the global AI boom, the KOSPI plunged more than 5%, posting its largest single-day drop since mid-August. Falling oil prices and bond yields eased market pressure, pushing Europe's Stoxx 600 index up 0.7% to a one-week high.

Rising pressure on the AI trade

A key area of the artificial intelligence trade is facing increasing pressure. With growing concerns over AI safety issues and emerging signs of tightening financing conditions, traders are reassessing whether the current pace of AI investment expansion can be sustained. Still, optimism that strong corporate earnings will support the broader stock market has partially offset the negative impact of the tech selloff. Wolf von Rotberg of Bank J. Safra Sarasin said: "Memory chip stocks are under pressure from intensifying competition, while more and more industry insiders are beginning to warn about AI bubble risks." He added: "As tech stock trading becomes more volatile, whether hyperscalers can confirm their capital expenditure guidance has become more important than ever." Julien Lafargue, Chief Market Strategist at Barclays Private Bank, said: "The market is increasingly realizing that the chip industry, especially the memory chip segment, is ultimately still a cyclical industry." He added: "Investors may have previously thought that this industry would remain largely insulated for years to come. But overnight news suggests that this window may need to be shortened, and competition could intensify as early as next year."

U.S. earnings arrive

Meanwhile, as Citigroup, Goldman Sachs, JPMorgan and Wells Fargo report earnings before the U.S. market opens, major U.S. bank stocks have clearly entered correction territory. The KBW Bank Index is down about 12% from its mid-August high, exceeding the 10% threshold typically considered a technical correction. Previously, sharp volatility in the bond market continued to weigh on bank stocks, with U.S. Treasury yields climbing to multi-decade highs. At the same time, banks must contend with the impact of high interest rates on credit card lending, residential mortgage lending and auto loan businesses. Von Rotberg of Bank J. Safra Sarasin said: "Loan portfolio quality, capital markets business activity and trading performance will be the focus of intense market attention, as all three areas could weaken." He noted: "Banks must demonstrate that loan growth remains strong and net interest income continues to rise to reverse the recent sustained share price declines." From a broader market perspective, data compiled by Bloomberg Intelligence shows that S&P 500 constituent companies are expected to report third-quarter profit growth of 25% year-over-year. However, Linh Tran of XS.com believes that because market expectations are already at elevated levels, merely achieving earnings growth may not be enough to drive stock prices higher. Tran said: "Investors will pay closer attention to the extent to which actual corporate results exceed expectations and whether companies can sustain growth momentum. These will be reflected in revenue, profit margins and business outlook guidance for the coming quarters."

Bond yields stabilize

Global bond markets rallied broadly. French government bonds were particularly notable, with the spread between French 10-year yields and comparable German bonds narrowing by about 4 basis points to below 140 basis points. The U.S. benchmark 10-year Treasury yield fell to 5.193%, moving further away from last week's high of 5.364%. Previously, the yield had risen to its highest level in 24 years. Over the past few weeks, inflationary pressures from high energy prices, combined with market concerns about swelling government debt, have triggered multiple rounds of bond market selloffs, pushing borrowing costs in several economies worldwide to multi-decade highs. Charu Chanana, Chief Investment Strategist at Saxo Bank, said that after the recent sharp rise in U.S. Treasury yields, investors are buying back into U.S. government bonds, but she views this more as a "tactical rebound." She said: "Sticky inflation, high oil prices and massive government borrowing remain the main obstacles to a sustained bond market recovery."

Focus on U.S. CPI

Traders are awaiting U.S. inflation data due Wednesday for clues about the Federal Reserve's future monetary policy path. According to the CME FedWatch tool, the market currently expects an 80.6% probability that the Fed will keep rates unchanged at its meeting later this month, up from 51% a month ago. On the oil front, Brent crude ended a three-session winning streak, with traders assessing energy supply risks from the attack on Saudi Arabia while weighing the prospect of increased diesel supply from Russia, causing international oil prices to retreat. Brent crude futures fell 1.7% to $104.78 per barrel, slightly below the two-week high reached in the previous session. As U.S. Treasury yields and oil prices fell in tandem, the dollar posted its first decline in a week. Major Wall Street banks including Goldman Sachs and Morgan Stanley are bullish on the outlook for a U.S. Treasury rebound. After weeks of selling pushed U.S. Treasury yields to multi-year highs, Wall Street strategists are beginning to reassess the investment value of U.S. government bonds. Institutions including Goldman Sachs, Morgan Stanley and Citigroup believe that as Treasury yields have climbed sharply, bond valuations are becoming increasingly attractive. However, there are still notable disagreements among major institutions regarding the Fed's future rate path and the timing of a Treasury rebound. Goldman Sachs believes that emerging signs of stress in credit markets, combined with improved investor positioning structure and market technical risks, could create conditions for a U.S. Treasury rebound. Citigroup prefers short-term Treasuries, with its strategists saying that as inflation slows and wage growth weakens, the Fed is unlikely to raise rates to 2023 highs. Morgan Stanley also believes Treasury yields are already attractive but recommends investors wait until after the Fed's policy meeting this month and the U.S. midterm elections before considering entry.

Is the Fed's rate-cut signal hidden in Walmart's stock price?

This indicator has once again sounded the recession alarm. Analysis by Jim Paulsen, former Chief Investment Strategist at Leuthold Group, shows that Walmart's stock price underperformed from May to August 2026, but since August, Walmart has outperformed the S&P Global Luxury Index by about 21%, and Walmart shares have risen about 8% from their late-August low. Paulsen believes this relative performance shift suggests consumers may be tightening their budgets again, meaning the U.S. economy is losing momentum, and future economic weakness could force the Fed to pivot back to accommodative policy. But if rising energy prices continue to push up overall inflation, or if corporate investment and consumer demand remain strong, policymakers may maintain a hawkish stance. Additionally, the historical performance of this indicator has drawn market attention. According to Paulsen's analysis, the "Walmart Recession Signal" has risen significantly before each of the past four recessions, and since 1990, similar shifts have appeared before every Fed easing cycle began.

Stocks in focus

Dragged down by the Korean stock market's decline, combined with ChangXin Memory Technologies' plan to launch more powerful new chips by the end of 2026, concerns about memory chip valuations intensified, and the memory chip sector fell broadly. U.S.-listed SK Hynix (SKHY), Western Digital (WDC) and Seagate Technology (STX) each fell more than 5%; Micron Technology (MU) dropped 3.7%; SanDisk (SNDK) fell 4.6%. JPMorgan raised its full-year net interest income forecast, sending its shares up nearly 1%. However, the company's third-quarter earnings and revenue both fell short of analyst expectations, limiting the gains. Wells Fargo reported mixed third-quarter results, with shares falling 1.1%. Earnings per share came in at $1.87, above the $1.85 expected by LSEG; revenue was $21.87 billion, below the $22.3 billion market expectation. Goldman Sachs reported third-quarter revenue of $18.68 billion, above the $16.71 billion expected by LSEG, sending shares up 2.8%. Johnson & Johnson reported better-than-expected third-quarter results. Adjusted earnings per share were $2.59, with revenue of $25.4 billion; analysts surveyed by LSEG expected earnings per share of $2.54 and revenue of $25.28 billion. Despite the strong results, the stock still fell more than 2%. Domino's Pizza's third-quarter results failed to impress investors, with shares falling nearly 3%. Although earnings per share and revenue both beat analyst expectations, U.S. same-store sales grew only 0.3%, in line with FactSet market expectations. Syndax Pharmaceuticals announced that a Phase 2 clinical trial of its antibody drug axatilimab for the treatment of idiopathic pulmonary fibrosis failed to meet its primary endpoint, sending shares plunging 14%. Syndax's head of research and development, Nick Botwood, said in a statement: "The MAXPIRe clinical trial did not achieve its primary endpoint. Given the highly encouraging preclinical scientific rationale for this drug in idiopathic pulmonary fibrosis (IPF), we are disappointed with this result." According to Cobb County police, a roller coaster accident occurred at a Georgia park, sending Six Flags shares down 7%. UnitedHealth Group reported earnings that beat analyst expectations, sending shares up 2%. Adjusted earnings per share were $4.69, with revenue of $112.69 billion; analysts surveyed by LSEG expected earnings per share of $4.14 and revenue of $111.4 billion. Sina partner platform futures account opening — safe, fast and guaranteed.