The Dow Jones Industrial Average (DJIA) grappled in the middle of a deepening consolidation zone on Thursday, churning on both sides of 46,200 and declining around 300 points on the day. Investors are still tilting toward the bullish side on expectations that current political and structural issues will eventually be resolved, but market sentiment continues to take regular hits as fissures grow wider. The US government shutdown remains an ongoing issue that looms over investors, and traders caught a fresh bout of risk-off jitters amid rising concerns of risky loans on bank balance sheets.
Big banks up, small banks down
Investment bank earnings bolstered broad-market sentiment during the midweek, but now regional and smaller-scale lenders are dragging investor confidence lower. Regional banks including Zions (ZION) and Western Alliance (WAL) tumbled on Thursday on faulty loans and concerns of borrower fraud. An undercurrent of weakness in regional banks adds onto growing market fears of the clear-as-mud private credit industry, which saw two auto-industry lending companies collapse recently.
US-China trade tensions are still simmering in the background, and investors are awaiting some sort of resolution from the Trump administration. US President Donald Trump threatened a new wave of triple-digit tariffs on China after China played a strong hand in the ongoing tariff dispute, imposing strict export controls on rare earth minerals produced in China, which remain a critical resource for many of the US’s key industries, especially tech and computing hardware.
Everything is fine
The US government shutdown continues to roll on with little sign of a fix, and official US datasets remain dark for the time being. The Federal Reserve (Fed), lacking a consistent flow of inflation-sensitive datasets, has little else to do but hold steady on its current pace of interest rate cuts. Rate markets have fully priced in two more rate cuts before the end of the calendar year, with another rate cut expected next March.
Dow Jones daily chart
Semiconductor stocks FAQs
A semiconductor is a term for various types of computer chips. Officially called semiconductor devices, these computer chips rely on semiconductor materials like silicon and gallium arsenide to process the electrical current that produces the modern world of computing. They come in many shapes, sizes, enhancements and configurations such as diodes, transistors and integrated circuits to more complicated applications like DRAM memory, simple processors and even GPUs.
First, there are the pure chip designers, such as Nvidia, AMD, Broadcom and Qualcomm. These companies use sophisticated software to design and test chips. Second, there are the equipment manufacturers that provide the machines necessary to build computer chips. These include ASML and Lam Research. Then, there are foundries that manufacture the chips. These include Taiwan Semiconductor and GlobalFoundries. Last of all are the integrated device manufacturers who design their own chips and additionally manufacture themselves. These include Samsung and Intel.
It is the observation that the number of transistors in an integrated circuit doubles every two years. The “law” is named after Gordon Moore, who founded Fairchild Semiconductor and later Intel. The doubling is possible due to the shrinking size of process nodes or parts in the computer chip. In 1971 the advanced commercial manufacturing had reached 10 microns in width. In 1987 semiconductor technology had advanced to 800 nanometers in width. By 1999, this process had moved to 180 nanometers. By 2007, the size had dropped to 32 nanometers, and this fell all the way to 3 nanometers in 2022, which is close to the size of human DNA.
In 2022, the global semiconductor industry had revenues just under $600 billion. In total, the industry shipped 1.15 trillion semiconductor units in 2021. The leading nations involved in the semiconductor supply chain are Taiwan, the United States, China, the Netherlands, South Korea, Japan and Israel.
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