U.S. Stocks Close Lower as Chip Makers Decline
23 May 2019 - 6:46AM
Dow Jones News
By Amrith Ramkumar
U.S. stocks fell for the third time in four sessions Wednesday,
dragged down by makers of semiconductors after a U.S. federal judge
ruled that Qualcomm illegally suppressed competition for cellphone
chips.
Shifts in U.S.-China trade relations have swung stocks in both
directions in recent weeks, with signs of easing tensions boosting
risk assets and fears of an extended tariff fight hurting them.
Chip makers reliant on trade flows and Chinese demand have been
among the most volatile stocks, with the PHLX Semiconductor Index
dropping 14% so far this month following a 35% rise in the first
four months of 2019. It shed 2.1% Wednesday.
Semiconductor stocks fell after the ruling that Qualcomm used
its dominant position to exact excessive licensing fees, a decision
that could shake up the broader smartphone industry. Qualcomm fell
$8.44, or 11%, to $69.31, while other chip stocks also dropped.
The declines followed a Tuesday rebound for chip stocks after
the White House granted temporary exemptions to an export blacklist
against Huawei Technologies, potentially easing U.S.-China tensions
as the two sides seek to get trade talks back on track. Some
analysts expect trade-related swings to continue until investors
get more clarity on escalating tariff threats by both sides.
"My guess is there will be some uncertainty being created for
the next three to six months, but I think there will be some
resolution," said Mustafa Sagun, chief investment officer at
Principal Global Equities.
The Dow Jones Industrial Average fell 100.72 points, or 0.4%, to
25776.61. The S&P 500 declined 8.09 points, or 0.3%, to
2856.27. The broad equity gauge is up 14% for the year and 3% below
its April 30 record.
The tech-laden Nasdaq Composite slipped 34.88 points, or 0.4%,
to 7750.84.
Energy stocks also fell alongside oil prices Wednesday after
government data showed a surprising increase in crude stockpiles
last week. The S&P 500 energy sector shed 1.6%.
Investors were weighing minutes from the Federal Reserve's
latest meeting showing that the central bank is comfortable leaving
interest rates where they are. Several Fed officials raised
concerns about what might happen if inflation continues holding at
lower levels, a potentially encouraging sign for those who expect
the Fed to lower rates by the end of the year.
Some analysts say higher tariffs in the U.S.-China trade spat
could impact consumer prices, potentially linking trade talks and
central-bank responses in the coming weeks.
"It's all rolled in together," said Mariann Montagne, a
portfolio manager at Gradient Investments.
The yield on the benchmark 10-year U.S. Treasury note fell to
2.393% Wednesday from 2.428% a day earlier. Bond yields fall as
prices rise.
Among individual stocks Wednesday, Target shares advanced $5.60,
or 7.8%, to $77.56 after the retailer posted a larger-than-expected
rise in same-store sales for the latest quarter.
Shares of Lowe's slid $13.16, or 12%, to $97.94 following
downbeat full-year earnings targets from the home-improvement
retailer. And Nordstrom declined $3.50, or 9.2%, to $34.35 after
the retailer posted a drop in net sales.
Still, earnings have generally been better than feared so far
this year, and economic data pointing to strength in the U.S.
consumer have also underpinned stocks in 2019.
"The data is probably more mixed but still to the positive
side," Mr. Sagun said. "We haven't seen the extreme
deterioration."
Elsewhere, the British pound dropped further against the dollar
after closing at a four-month low on Tuesday as investors weighed
the latest push by U.K. Prime Minister Theresa May to gain
parliamentary support for her Brexit deal.
The Stoxx Europe 600 fell 0.1%.
Earlier, Hong Kong's Hang Seng and Korea's Kospi both gained
0.2%, Japan's Nikkei edged up 0.1% and the Shanghai Composite
dropped 0.5%.
Shares in video-surveillance company Hangzhou Hikvision Digital
Technology fell 5.5% Wednesday on reports that it could be the
latest company to be blacklisted by the U.S.
-- Nathan Allen contributed to this article.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
May 22, 2019 16:31 ET (20:31 GMT)
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