Invest1 publisher3 min readPublished
Goldman fell nearly 8.5% in the week the Nasdaq gained 0.7%
The Fed's first hike in three years took its benchmark to 3.75%-4% and the Dow down 1.7% for a third straight losing week. Chipmakers and data center suppliers sold off Monday on AI safety headlines and got most of it back by Friday.
The Investor · Invest desk
What happened
- The Dow fell 1.7% for its third straight losing week, and the column says the 30-stock average took the worst of the rate hike, especially through its bank holdings.
- Goldman Sachs lost nearly 8.5% across the five sessions, the weakest stock in the Dow and, by the column's account, the weakest holding in its own portfolio.
- The S&P 500 slipped 0.08% and the Nasdaq gained 0.7% over the same week, as investors came back to artificial intelligence names after selling them early on.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- decision A hiking cycle turns bank exposure into a funding-mix question, and the column answered it by buying BNY twice in one week on the strength of its fee revenue share.
- exposure Because the 10-year's high print arrived during Tuesday's crude surge, a Mideast supply scare now reaches bank equity through the bond market as well as fuel costs at the freight names.
- contradiction CNBC's own account of past cycles has technology rebounding late, which sits awkwardly with AI names winning back most of Monday's losses inside the same week.
- precedent One day of safety headlines was worth roughly 9% at GE Vernova, so the next call for a coordinated slowdown gets priced as a data center capex event before anyone establishes that it is one.
A quarter-point move in the policy rate does not cut a bank's forward earnings by 8.5% in five sessions. Goldman Sachs fell nearly that much and was the worst performer in the Dow [3]; the index itself fell 1.7% [2], so Goldman moved about five times as far [2]. The Fed's benchmark went to a 3.75% to 4% target on Wednesday, its first increase in three years [1]. Kevin Warsh said "inflation is too high and has been for too long" [5]. His repeated references to price pressures sent stocks sharply lower that day, a snap-back rally followed on Thursday, and Friday was little changed [6]. Jim Cramer said the hike makes it harder to make money in stocks because investors are now "fighting the Fed" [18].
The 10-year Treasury yield finished the week at 5%, after printing above 5.04% on Tuesday during the crude surge, and CNBC says yields have been moving with crude prices [7]. WTI and Brent hit their highest levels since the middle of May that day on Mideast supply concerns, then slid for three sessions back toward flat for the week [8]. Boeing, FedEx and FedEx Freight were among the biggest losers in the portfolio the column tracks [9].
The spread between the Dow and the Nasdaq came to 2.4 points [1]. Wells Fargo, BNY and Capital One fell sharply alongside Goldman [10]. The safety argument took the chipmakers and the electrical suppliers, and it lasted about a day. Intel and Micron each fell just over 5% on Monday; GE Vernova dropped roughly 9% and Eaton roughly 8%, on the fear that slower model development would curb data center spending [11]. Most of that came back over the rest of the week as investors grew less worried the debate would change the pace of the buildout [12]. Software mostly had a winning week, and the profit-taking landed on Salesforce, up more than 50% quarter to date after being crushed earlier in the year [19].
Dario Amodei's Sept. 12 essay asked for a slowdown in frontier model development. Sam Altman and Elon Musk co-signed the concerns; Jensen Huang pushed back on industry-wide coordination, arguing that companies can implement safeguards themselves [13]. Huang told Jim Cramer on Tuesday, "We should create products and properly test them. And if they're not ready to be released, just hold on to it and keep testing it and keep engineering until it's ready." [14]
The column added to BNY on Tuesday and again on Thursday [15]. Roughly 70% of BNY's revenue is fee-based, and the column cites that as less exposure to higher deposit costs and slower loan growth [15]. That leaves about 30% of the revenue line facing both [3]. BNY fell with the group last week and is the best of the banks year to date [16].
I would expect the sector spread to hold while the hike path is open. The long end is where the pressure sits: at 5%, the 10-year is about 112 basis points above the midpoint of the new target range [4]. The counter-case comes from CNBC's own history lesson, that past cycles brought shifts in leadership with defensive sectors holding up better early and technology rebounding later [17]. That describes last week, and it would put the technology repricing ahead. The read fails if Goldman takes back its 8.5% before the Fed's next meeting. That would date the bank selling to positioning.
What to watch
- A second quarter point at the next meeting, and whether Eaton and GE Vernova then fall with the banks instead of trading on safety headlines.
- Crude: the 10-year printed above 5.04% during Tuesday's oil surge, so another supply scare tests how much of the bank repricing is really an oil trade.
- Whether Amodei's call produces any actual industry coordination, the development that would justify Monday's move in the data center suppliers.