US stocks dip ahead of inflation data as tech sell-off hits Asia

NEW YORK: Wall Street stocks were mostly lower at the end of a choppy session Tuesday, digesting solid results from US banks and a pullback in Asian markets prompted by worries over the AI investment boom.

While JPMorgan Chase missed analyst estimates, the US banking giant joined three other large US banks in reporting year-on-year profit increases that pointed to continued health in the US consumer.

JPMorgan Chief Financial Officer Jeremy Barnum described US consumer spending as "sort of robust," adding that the consumer credit picture remains "quite resilient" despite persistent inflationary trends.

The strong bank earnings gave some support to Wall Street indices, although investors remained cautious ahead of Wednesday's consumer price index data, a key input to upcoming Federal Reserve decisions.

"Any real acceleration (in inflation) would probably send yields back up, the dollar back up, and that could be a problem for equities," said Peter Cardillo of Spartan Capital Securities.

The S&P 500 finished essentially flat, while both the Dow and Nasdaq ended modestly lower.

Earlier, Asian equity markets were under renewed pressure due to weakness in AI-related names.

The selling came after Hock Tan, chief executive of the US semiconductor giant Broadcom, likened the AI buying frenzy to gambling.

"A lot of investors have no clue what they are investing in," Tan told a conference in Singapore, saying they "set very extreme expectations only to find out that it's almost like they are in a casino".

The International Monetary Fund weighed in on the debate, warning of an AI correction at the beginning of its annual meeting in Bangkok.

The boom in artificial intelligence -- and the related rush to manufacture semiconductors and build data centres -- has provided a boost to global growth despite geopolitical pressures including the Middle East war.

But "growing evidence suggests that AI capabilities can be delivered at lower investment levels... or that potential economic gains may not be as large as expected", the IMF said in its Global Financial Stability Report.

On the trading floors, South Korea's Kospi index tanked 5.5 per cent by the close as chip titans SK hynix and Samsung took a beating.

The decline also followed reports that China's CXMT had made progress on new technology to boost memory chip density, which rival firms have also been racing to achieve.

The company is aiming to release a new server-memory product based on the structure by the end of the year, the reports said.

"The tech sector is taking it on the chin," said Trade Nation analyst David Morrison, noting that the CXMT development suggests that going forward, supplies of a key type of memory chips might not be as tight as many investors had thought.

Japanese stocks also slumped, with chipmaker Kioxia tumbling more than 13 per cent on the Nikkei 225, which lost 1.8 per cent.