U.S. Stocks Pulled Down by Semiconductor Shares
September 06 2018 - 12:04PM
Dow Jones News
By Ben St. Clair and Amrith Ramkumar
Weakness in technology shares hurt U.S. stocks for the second
straight session Thursday, with worries about regulation and trade
continuing to hang over the market's best-performing sector.
The tech-heavy Nasdaq Composite fell 0.9%, while the S&P 500
shed 0.5%. The Dow Jones Industrial Average declined 29 points, or
0.1%, to 25947. Major indexes had fallen in three of the previous
four sessions entering Thursday, though they remain near record
levels.
Semiconductor stocks dragged the sector lower Thursday, with
Micron Technology shares slumping 10% after Baird analysts lowered
their price target on the stock. Lam Research and Applied Materials
were also among the S&P 500's worst performers.
Chip makers have been buffeted by trade developments throughout
the year because of their reliance on global commerce, particularly
through China. While their shares recovered last month, some
analysts expect swings to continue as trade discussions roll
on.
More broadly, some investors predict that the volatility that
has engulfed stocks around the world will spread to the U.S. if the
trade fight with China continues to escalate.
The possibility of additional tariffs "doesn't seem particularly
priced into U.S. markets," said Clark Fenton, managing partner and
chief investment officer at Agilis Investment Management.
Investors are waiting to see if the Trump administration will
move ahead with tariffs on an additional $200 billion of Chinese
goods.
Weakness in internet stocks also continued Thursday, after
Facebook and Twitter executives testified before Congress a day
earlier about election interference on their platforms. Twitter,
Facebook and Google parent Alphabet were all down at least 2.5%,
while Amazon.com dropped 1.5%.
Despite recent volatility, some analysts expect consistent
revenue growth to keep technology stocks as the market's leader.
Dell Technologies boosted its full-year sales guidance after
reporting a nearly 20% increase in total net revenue for the most
recent quarter. Shares were little changed.
Broadcom is slated to report earnings after the market closes
Thursday.
Moves in most other sectors were muted, with analysts looking
ahead to Friday's jobs report for the latest reading on the U.S.
economy.
Data on Thursday showed the number of Americans filing
applications for new unemployment benefits fell at the end of
August to a nearly five-decade low, while U.S. worker productivity
rose this spring at the best pace in more than three years.
Consistent U.S. economic figures have supported major indexes
this year in the face of continuing trade disputes with China and
Canada. At the same time, investors have said growth hasn't
accelerated so quickly that the Federal Reserve will have to
quicken its pace of interest-rate increases, keeping the backdrop
favorable for U.S. stocks.
While assets more tied to global growth including commodities
and emerging markets have wobbled, some analysts expect the U.S. to
remain a favored region.
"In the short term, [trade is] not necessarily a huge story for
the U.S.," said Jonas Goltermann, an economist at ING. "It's much
worse for the Chinese."
The yield on the 10-year U.S. Treasury note fell to 2.880%,
according to Tradeweb, from 2.902%. Yields fall as prices rise.
The dollar weakened for the second straight session, lifting
beaten-down commodities by making them cheaper for overseas buyers.
The WSJ Dollar Index, which tracks the dollar against a basket of
16 other currencies, dropped 0.2%.
Elsewhere, the Stoxx Europe 600 was down 0.4% after closing
Wednesday at its lowest mark since April.
Stocks in Asia continued to fall, with Hong Kong's Hang Seng
shedding 1% and the Shanghai Composite down 0.5%. Japan's Nikkei
Stock Average declined for the fifth straight session, closing down
0.4%.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
September 06, 2018 11:49 ET (15:49 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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