U.S. stock markets witnessed a downturn with major indices closing in the negative. The Dow Jones fell 0.22%, the Nasdaq dropped 0.56%, and the S&P 500 decreased by 0.33%. Notably, chip stocks, particularly AI chip giant AMD (AMD, Financial), experienced significant declines as AMD's revenue forecast for the fourth quarter fell short of market expectations, raising concerns among investors.
AMD's stock plummeted over 10% following the company's announcement of its third-quarter earnings. While the earnings met market expectations with a revenue of $6.82 billion, up 18% year-over-year, the projected revenue for the fourth quarter was approximately $7.5 billion, slightly below the anticipated $7.55 billion. This outlook contributed to the sharp drop in AMD shares.
In another hit to chip stocks, Super Micro Computer faced a drastic drop of over 32%, marking its biggest decline since 2018. The company is embroiled in an auditing controversy, as its auditor Ernst & Young resigned, raising significant concerns about the company's accounting practices.
The negative performance in chip stocks extended to other major players like Qualcomm, ASML, Micron Technology, Intel, and TSMC, all of which saw decreases in their stock values.
In broader market movements, major tech companies like Nvidia and Apple also saw their stocks decline by over 1%, while Google managed a gain of over 2%. Meanwhile, stocks associated with former President Trump weakened, with Trump Media & Technology Group dropping over 22%.
Popular Chinese stocks also mostly saw declines, as evidenced by the Nasdaq Golden Dragon China Index falling nearly 1%. Stocks such as Nio, Pinduoduo, and JD.com saw drops, while New Oriental and Li Auto managed gains over 1%.
Economic data showed a strong U.S. labor market with October's ADP employment change reporting an increase of 233,000, far surpassing the forecast of 111,000. However, the GDP growth rate in the third quarter was 2.8%, below the expected 3%, which could influence Federal Reserve's interest rate decisions.
Amid economic uncertainty and geopolitical tensions, gold prices surged to a new high. COMEX gold futures surpassed $2,800 per ounce, nearing record levels. Goldman Sachs has raised its gold price forecast, predicting prices could reach $2,900 per ounce by early next year and $3,000 by the end of the same year. This is attributed to investors seeking safe havens amid increasing geopolitical risks, including U.S. election concerns and potential trade tensions.
