U.S. Stocks Dragged Down by Tech Sector
May 20 2019 - 3:14PM
Dow Jones News
By Avantika Chilkoti and Michael Wursthorn
Shares of technology companies fell Monday after some U.S.
businesses moved to comply with the Trump administration's decision
to put Huawei Technologies on a trade blacklist, pushing the
S&P 500 lower to start the week.
Google parent Alphabet and other tech companies moved to cut
Huawei's access to their technology, sending shares of those
companies lower to extend the broad index's latest bout of
volatility.
Investors worry the moves against Huawei will further inflame
trade tensions between the U.S. and China, which have deteriorated
in recent weeks following a new round of tariffs from both
sides.
"These restrictions have raised concern that the trade war is
more broadly aimed at containing China as an economic threat rather
than revising unfair trade arrangements," said Jason Pride, chief
investment officer for private clients at Glenmede Trust Co.
The S&P 500 fell 0.5% in recent trading, while the Dow Jones
Industrial Average slipped 58 points, or 0.2%, to 25705. The
tech-heavy Nasdaq Composite fell further, shedding 1.2%.
Alphabet will restrict Huawei's access to certain Android
features, while Qualcomm has suspended shipments to Huawei of its
chips, The Wall Street Journal reported. The moves come after the
Trump administration's decision last week to curb the
Shenzhen-based telecom giant's access to U.S. technology.
Shares of Alphabet declined 2.1% in the wake of the news, while
Qualcomm slid 5.4%. Chip makers were broadly hit, with the PHLX
Semiconductor Index falling 3.3% in recent trading.
But while much of the selloff focused on companies tied to the
latest Huawei developments, several other technology and
communication stocks also stumbled as investors weighed the
likelihood of a rebuttal from China.
Shares of Apple, for example, slid 3.3% after HSBC cut the
iPhone maker's price target, citing the company's exposure to the
trade conflict between the U.S. and China.
Tesla shares, meanwhile, fell to their lowest level in a year
after analysts cited concerns around the electric car maker's
growth prospects and the underlying demand for its Model 3 vehicle.
Shares were recently down 2.5%.
Including Monday's declines, the S&P 500 has given up more
than 3% this month since trade tensions re-emerged.
Investors are now positioning themselves for more bouts of
volatility, a sign that many expect the market's erratic swings to
continue. Assets in exchange-traded funds that tend to profit when
volatility rises hit a record $3.1 billion in May, according to
FactSet data.
"The recent action against Huawei confirms our view that the
relationship between Washington and Beijing will remain tense,"
analysts at UBS Group AG's global wealth-management arm wrote in a
note to clients. "The growing rivalry between the world's two
largest economies will simmer in the background, with repercussions
on business and investments."
Stocks around the world mostly fell. The Stoxx Europe 600 slid
1.1%, as most regional indexes notched declines. In Asia, the
Shanghai Stock Exchange dropped 0.4% and Hong Kong's Hang Seng
Index declined 0.6%. Japan's Nikkei Stock Average gained 0.2%.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and
Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
May 20, 2019 14:59 ET (18:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.