US close: Apple drags Dow lower, but S&P 500 and Nasdaq rise

(Sharecast News) - US equity markets were mixed on Tuesday, with Apple dragging the Dow into the red but chip stocks lifting the S&P 500 and Nasdaq higher.

The Dow finished 0.4% lower with tech heavyweight Apple dropping nearly 2% after issuing a weaker-than-expected margin outlook and disappointing quarterly iPad sales the previous evening.

However, solid gains in the semiconductor sector provided support to the S&P 500 and Nasdaq, which rose 0.4% and 0.8%, respectively.

Investors were also keeping a close eye on the midterms on Tuesday, with prediction markets currently implying roughly a 75% chance of Democrats retaining control of the Senate.

While Donald Trump remains in the White House, Democratic gains in either the House or Senate could still have significant implications for congressional oversight and investigations in Washington, with potential ramifications for sectors including defence, AI and healthcare.

While markets braced for the election results, falling oil prices were also in focus amid rising hopes of diplomacy in the Middle East. Front-month Brent crude was down 1.1% at $103.60 a barrel, extending a near-8% slump on Monday.

"The oil price rollercoaster was up and running with early increases to the price of a barrel of the black stuff. But it later retreated after comments from Donald Trump about stopping billions of dollars in funding for Israel, though the details on this were thin on the ground," said AJ Bell's head of financial analysis Danni Hewson.

"There's no telling quite what mood the US president will be in after all the votes are counted, nor what the results might mean for his policies both foreign and domestic."

According to JPMorgan, a Democratic sweep of both chambers could trigger weakness in AI-related stocks. "Chip stocks might have been enjoying a post-slump bump as investors hunted for bargains, but Apple's warning about the cost of components kept nerves about AI spending alive," Hewson said.

In terms of Tuesday's earnings, Shopify dropped despite reporting a 32% year-on-year increase in third-quarter revenues to $3.74bn as subscription gross profits and gross merchandise volumes underwhelmed.

Pfizer lifted its full-year guidance after healthy demand for its blood thinners and cancer drugs helped offset falling sales of Covid-19 medicines. However, the stock finished lower as the pharma giant posted third-quarter revenues of $16.6bn, largely unchanged on the same period a year earlier.

Yum Brands also fell after a mixed bag of third-quarter results, with earnings above estimates but revenues falling short amid weakness at Taco Bell amid a cyclospora outbreak linked to iceberg lettuce.

On the macro front, job openings were little changed in September at 7.5m, according to the Bureau of Labor Statistics' JOLTS jobs report, while the job openings rate held steady at 4.5%. Meanwhile, US factory orders rose for a third straight month in September, increasing 1.8% to $677.2bn following a 0.3% gain in August, according to the Census Bureau.