U.S. stocks came under pressure on Sept. 14, with all three major indexes opening lower in a broad selloff. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq opened down 0.2%, 0.7% and 1.2%, respectively. The Nasdaq 100 fell to a six-week low.
Chip stocks were hit harder. The Philadelphia Semiconductor Index at one point dropped 5.9%, while Nvidia, Intel, Micron, SanDisk and SK Hynix fell 5% to 7%.
AI concerns, oil and rate expectations weigh on sentiment
The report said the selloff was driven by three factors: worries over a slowdown in AI development, a sharp rise in oil prices, and growing concern about U.S. inflation and interest-rate expectations.
Anthropic CEO Dario Amodei recently called for slowing the development of frontier AI models, raising concerns that major technology companies may cut AI capital expenditure. At the same time, Brent crude climbed above $105, U.S. core CPI for August rose 0.3% month over month, and market expectations for a 25-basis-point Federal Reserve rate hike this week increased.
JPMorgan keeps a bullish view
Despite the market decline, Mislav Matejka, JPMorgan's head of global and European equity strategy, said he remains constructive. In his view, higher oil prices may pressure valuations, but investors should not turn blindly bearish on U.S. stocks as long as earnings growth at American companies does not show clear deterioration.
Matejka also said that if tensions in the Middle East ease later on, or if third-quarter earnings come in above expectations, current pessimism could instead set up a rapid rebound in the market.
Focus shifts to the earnings season
JPMorgan had previously raised its year-end target for the S&P 500 to 8,000 from 7,800. It also expects earnings per share for index constituents to rise 29% year over year to $350.
Matejka advised investors to treat the current pullback, driven by high oil prices and fears of rate hikes, as a chance to buy on weakness, while watching for catalysts from the October-to-November earnings season.