Stocks fell on Wednesday as a fall in chipmaker shares and lingering trade concerns dampened investor sentiment.
The Nasdaq Composite dropped 1 percent, led by sharp declines in semiconductor shares and weakness in other major tech companies. The Dow Jones Industrial Average fell 26 points as Intel shares lagged. The S&P 500 pulled back 0.3 percent as a 1.3 percent drop in tech offset a 1.4 percent jump in energy.
The VanEck Vectors Semiconductor exchange-traded fund (SMH) fell 3.1 percent, led by a decline in Micron. Shares of Micron dropped more than 6 percent after Goldman Sachs downgraded them to neutral from buy, citing a “snowballing” decline in memory-chip demand.
Shares of Dow-member Intel fell nearly 2 percent while Applied Materials and Lam Research pulled back 3.2 percent and 1.9 percent, respectively.
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Semiconductor stocks have been under pressure lately amid heightened concerns of slowing memory-chip demand, helping drag the broader tech space lower. The SMH has dropped more than 3 percent this month while the S&P 500 tech sector is down 1.8 percent through Tuesday’s close.
Tech shares have also fallen amid increasing regulatory pressure toward social media companies, especially Facebook and Twitter. Facebook shares slipped 1.3 percent while Twitter dropped 2.5 percent.
Apple shares, meanwhile, fell more than 1.5 percent ahead of an expected unveiling of new iPhone models.
Tech’s decline this month has pushed equities away from all-time highs reached late in August, along with ongoing worries over global trade.
China will seek permission from the World Trade Organization to inflict sanctions upon the U.S. as tensions between the two largest global economies continue. Last Friday, President Donald Trump told reporters that he was “ready to go” on hitting China with an additional $267 billion worth of tariffs, on top the already $200 billion in tariffs, previously announced.
“The U.S./China trade situation did get slightly worse yesterday,” wrote Tom Essaye, founder of The Sevens Report. “Still, the market looked past it be-cause, for now, a decision on the $200 billion in additional tariffs isn’t expected for several weeks (although to be clear, this remains a very significant potential risk point for markets near term).”
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Equities closed higher on Tuesday as a rebound in tech shares led the gains. The Dow rose more than 100 points while the S&P 500 and Nasdaq gained 0.4 percent and 0.6 percent, respectively.
“This kept the [S&P 500] above last Friday’s lows, allowing the most recent peak-to-trough move to remain at -1.8%,” said Frank Cappelleri, executive director at Instinet.
“This lines up with the magnitude of the two most recent pullbacks. Could two very bad sessions suddenly destroy this persistent advance? Yes, and that has been the risk since the April lows (and for all of 2017, for that matter),” Cappelleri said in a note. “But simply thinking it is due hasn’t been enough.”
Source: cnbc.com | Original Link