Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Nasdaq closes lower as chipmaker Micron's warning renews tech rout

Economy Aug 09, 2022 07:27PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 8, 2022. REUTERS/Andrew Kelly 2/2
 
US500
+1.97%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DJI
+1.88%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NVDA
+2.60%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
OXY
+4.92%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MU
+0.83%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BLK
+1.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Herbert Lash and Bansari Mayur Kamdar

NEW YORK (Reuters) - The Nasdaq closed down on Tuesday after a dismal forecast from Micron Technology pulled chip makers and tech stocks lower as investors await U.S. inflation data that could lead the Federal Reserve to further tighten its efforts to curb inflation.

High inflation numbers on Wednesday, following last week's blowout jobs report, would likely stop the Fed from easing interest rates hikes anytime soon and halt the market's rally off mid-June lows.

Traders see a 68.5% chance of the Fed raising rates by 75 basis points in September, in what would be its third big hike in a row.

Adding to concerns of a tight labor market and runaway inflation, data on Tuesday showed an acceleration of unit labor costs in the second quarter, which suggested strong wage pressures will help keep inflation elevated.

Unit labor costs - the price of labor per single unit of output - rose at a 10.8% rate, following a 12.7% rate of growth in the first quarter, the Labor Department said.

"We're still seeing wage pressure building, using last Friday's job data as a gauge," said Jimmy Chang, chief investment officer at Rockefeller Global Family Office.

Chang remains cautious about the market's outlook. "I don't think it's going to be a set of numbers that will change the Fed’s policy course," he said.

Inflation at the moment is primarily supply driven, so the traditional central bank playbook of tightening rates to crimp demand will not be as effective as previous cycles, said Jean Boivin, head of the BlackRock (NYSE:BLK) Investment Institute.

"We're going to see central banks being surprised by inflation. They will have to sound hawkish on the back of this," Boivin told the Reuters Global Markets Forum.

The Dow Jones Industrial Average fell 58.13 points, or 0.18%, to 32,774.41, while the S&P 500 lost 17.59 points, or 0.42%, to 4,122.47 and the Nasdaq Composite dropped 150.53 points, or 1.19%, to 12,493.93.

Volume on U.S. exchanges was 10.64 billion shares, compared with the 10.94 billion average for the full session over the past 20 trading days.

Seven of the 11 major S&P 500 sectors fell, led by a 1.5%decline in consumer discretionary. Value stocks closed flat, while the growth index slid 0.8%.

The jobs data from last Friday eroded some of the bullish arguments that the Fed would "pivot" to a neutral policy stance, followed by rate cuts early next year, Chang said.

"You have some strategists and technicians capitulating, saying the bottom is behind us, this is a new bull market now," he said. "Typically in a bear market, a summer rally is not unusual."

Micron Technology Inc (NASDAQ:MU) slid 3.7% after the memory-chipmaker cut its current-quarter revenue forecast and warned of negative free cash flow in its next quarter as demand wanes for chips in PCs and smartphones.

Micron's dismal forecast, a day after Nvidia (NASDAQ:NVDA) Corp warned of weakness in its gaming business, knocked the Philadelphia Semiconductor index down 4.57%, its biggest single-day decline since June 16 as all 30 components fell. The index has lost 7% the past three days.

GRAPHIC-Semiconductor stocks lag the tech-heavy Nasdaq, https://fingfx.thomsonreuters.com/gfx/mkt/egvbkdamkpq/Pasted%20image%201660050101204.png

President Joe Biden signed a sweeping bill to provide $52.7 billion in subsidies for U.S. semiconductor production and research, a measure that gained bipartisan support to combat China's investment in technology.

"It's utterly discounted," said Michael Shaoul, chief executive officer at Marketfield, on why chip stocks were unfazed by the bill.

Rate-sensitive growth and technology stocks slipped as U.S. Treasury yields climbed.

Despite a choppy recovery, the benchmark S&P 500 is down 13.5% this year after hitting a record high in early January as surging consumer prices, hawkish central banks and geopolitical tensions weigh.

Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to Refinitiv data as of Friday.

Occidental Petroleum (NYSE:OXY) rose 4.0% after Warren Buffett's Berkshire Hathaway (NYSE:BRKa) increased its stake to 20.2% of outstanding shares. Occidental's shares have more than doubled in price this year.

U.S. vaccine maker Novavax (NASDAQ:NVAX) slumped 29.6% after it halved its annual revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States amid a global supply glut and soft demand.

Declining issues outnumbered advancing ones on the NYSE by a 1.91-to-1 ratio; on Nasdaq, a 2.41-to-1 ratio favored decliners.

The S&P 500 posted four new 52-week highs and 30 new lows; the Nasdaq Composite recorded 42 new highs and 66 new lows.

Nasdaq closes lower as chipmaker Micron's warning renews tech rout
 

Related Articles

Airlines cancel 2,000 U.S. flights for Thursday
Airlines cancel 2,000 U.S. flights for Thursday By Reuters - Sep 28, 2022 3

By David Shepardson (Reuters) - Airlines canceled almost 2,000 U.S. flights for Thursday after Hurricane Ian hit Florida's Gulf Coast with catastrophic force in one of most...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (19)
Kerry Ditto
Kerry Ditto Aug 09, 2022 2:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Companies probably hurry up to buy own shares back before they have to pay 1% taxes on it when IRA bill becomes effective. If so, there would be lots of share buyback activitites leading to big market rally.
Megat Anwar
Megat Anwar Aug 09, 2022 2:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
lol
First Last
First Last Aug 09, 2022 2:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Also expect to see less awarding of stock options & shares by the upper management to themselves.
First Last
First Last Aug 09, 2022 2:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"A data analysis conducted by Bloomberg Opinion and Enersection, a Houston-based data visualization firm, of where renewable energy technology gets deployed in the US shows the vast majority is in Republican-led congressional districts."  --  www.bloomberg.com/opinion/articles/2022-08-08/senate-climate-change-ira-bill-will-largely-benefit-republican-districts
Milan Shukla
Milan Shukla Aug 09, 2022 2:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buybacks? Sure, only if they have extra cash on balance sheet after capex
Mitchel Pioneer
Mitchel Pioneer Aug 09, 2022 2:25PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
With the predictability of the setting sun, the CRIMINAL FRAUD unfolds in living color at 11AM sharp, and the losses magically vanish from the system.  And once again, savvy "investors" stop their "buying" right when the Ponzi Scheme goes green.  Just normal "trading" action powered by criminally managed computers.  When does the "late trade" magic show begin?
First Last
First Last Aug 09, 2022 2:25PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The market is at/near day's low
goutham kumar
goutham kumar Aug 09, 2022 2:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The world oil demand is expected to rise by 2.08 million barrels per day (bpd), down from 2.23 million in the previous forecast, to 99.43 million bpd in 2022, the US Energy Information Administration said in its latest monthly report, as reported by Reuters.
za ar
za ar Aug 09, 2022 2:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
To the moon 🌝
Jesse James
Jesse James Aug 09, 2022 12:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so investing 40bln for expansion is a bad thing
First Last
First Last Aug 09, 2022 12:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It is for a retrumplican who values party/cultleader over country.
Milan Shukla
Milan Shukla Aug 09, 2022 12:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Adding fuel to the fire is temporary, lets call it manipulating until its burned down
Antonio Velardo
Antonio Velardo Aug 09, 2022 12:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nobody talking here of the new tax low. Will it affect caital gains?
Milan Shukla
Milan Shukla Aug 09, 2022 12:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Beacuse meme crazy maniacs down want to admin, doomsday for stock is brewing. S&P 3200
Brad Albright
Brad Albright Aug 09, 2022 12:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Will not affect capital gains.
Kerry Ditto
Kerry Ditto Aug 09, 2022 11:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Amazon prime days were mid July when they lowered prices sharply including core items. So, core July CPI would be sharply lower in July.
Jedrek Zak
Jedrek Zak Aug 09, 2022 11:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes. That is how cpi works. Based solely upon how much Amazon charges for their stuff.
First Last
First Last Aug 09, 2022 11:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jedrek Zak   The CPI is based on surveys asking people how much they actually paid for particular items.  If they paid a low price on AMZN, ...
Kerry Ditto
Kerry Ditto Aug 09, 2022 11:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Market leader DOW moves to green zone. Others will follow.
Ronald Warren
Ronald Warren Aug 09, 2022 11:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bot?
Ross Dre
Ross Dre Aug 09, 2022 11:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ronald Warren no just an idiot.
Kerry Ditto
Kerry Ditto Aug 09, 2022 11:13AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Today is likely a massive green day at close, if insiders know what the inflation number is already.
Kerry Ditto
Kerry Ditto Aug 09, 2022 11:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Big money mgr like Wood probably come in and pick up low priced stocks.
ZS Beck
ZS Beck Aug 09, 2022 11:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wood is broke, and shes a looser
Milan Shukla
Milan Shukla Aug 09, 2022 11:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wasnt green ir was it?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email