Wall St. lower as tech stocks sell-off on Huawei fallout worries
1 month ago DieselGasoil Comments Off on Wall St. lower as tech stocks sell-off on Huawei fallout worries
(Reuters) – U.S. stocks fell on Monday, as Washington’s crackdown on China’s Huawei Technologies stoked fears about a hit to the broader technology sector and ratcheted up trade tensions between the world’s two largest economies.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 20, 2019. REUTERS/Brendan McDermid
Apple Inc slumped 3.3%, weighing the most on the three main indexes and driving down the S&P 500 technology sector 1.27%, the biggest drop among the six S&P sectors trading lower.
The iPhone maker was also pressured by a warning from HSBC that higher prices for the company’s products following the increases in tariffs could have “dire consequences” on demand.
U.S. suppliers of Huawei, including Qualcomm, Micron Technology and Broadcom Inc, fell between 3% and 5%, while the Philadelphia Semiconductor Index slid 2.9% to its lowest level in over two months.
“Huawei is sort of emblematic of the problems that are inherent in this negotiation,” said Peter Cecchini, managing director and chief market strategist at Cantor Fitzgerald in New York.
“These sort of issues aren’t resolved in short order, it takes a lot of time and effort to work through all of this.”
Huawei, the world’s largest telecoms equipment maker, was added to a trade blacklist by the Trump administration on Thursday, the latest worry for financial markets already reeling under uncertainties from the latest round of tariffs.
Mobile phone parts maker Lumentum Holdings Inc said it would halt shipments to Huawei and cut its quarterly revenue expectations, driving its shares down 2.5%.
“Inventory corrections are going on in the semiconductor space and the industry is pricing in the Huawei impact on the value chain but they are not pricing in the global slowdown,” added Cecchini.
Alphabet Inc’s Google has suspended some business with Huawei, Reuters reported on Sunday, while chipmakers including Intel Corp, Qualcomm, Xilinx Inc and Broadcom said they will not supply the Chinese company until further notice, according to a Bloomberg report.
Helping limit the losses were gains in Sprint Corp and T-Mobile US Inc. Sprint shares jumped 24%, while T-Mobile rose 5.5% after the companies won support of the U.S. telecoms regulator chairman for their proposed $26 billion merger. Verizon Communications Inc and AT&T Inc gained about 2.5%.
At 11:13 a.m. ET, the Dow Jones Industrial Average was down 79.01 points, or 0.31%, at 25,684.99. The S&P 500 was down 11.90 points, or 0.42%, at 2,847.63 and the Nasdaq Composite was down 90.76 points, or 1.16%, at 7,725.53.
Wall Street’s main indexes have succumbed to selling pressure in May after touching record highs on mounting concerns about a protracted U.S.-China trade war. The S&P 500 is on track to post its worst monthly decline since the December sell-off, trading 3.7% off its all-time high.
Investors will also look for comments from a clutch of retailers reporting this week such as Home Depot, Nordstrom, Kohl’s and Target for comments on the impact of the latest round of tariffs.
Dish Network Corp shares tumbled 11.2%, the most among S&P 500 companies, after the satellite TV service provider said it would buy broadcast satellite service assets from EchoStar Corp in an $800 million deal.
Declining issues outnumbered advancers for a 1.55-to-1 ratio on the NYSE and a 1.78-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and 11 new lows, while the Nasdaq recorded 23 new highs and 117 new lows.
Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila