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Wall St. pressured as Huawei fallout hits tech shares

Published 05/20/2019, 03:24 PM
Updated 05/20/2019, 03:24 PM
© Reuters. Traders work on the floor at the NYSE in New York

By April Joyner

NEW YORK (Reuters) - U.S. stocks slid on Monday as the White House's restrictions on Chinese telecom equipment company Huawei Technologies Co Ltd weighed on the technology sector and raised concerns that the move would further inflame trade tensions between the United States and China.

Since the White House added Huawei to a trade blacklist last week, several companies have moved to suspend business with the world's largest telecom equipment maker. Alphabet (NASDAQ:GOOGL) Inc's Google has moved to stop providing Huawei with access to its proprietary apps and services, Reuters reported on Sunday. Mobile phone parts producer Lumentum Holdings Inc also announced that it has discontinued shipments to Huawei.

Other chipmakers, including Intel Corp (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM), Xilinx Inc (NASDAQ:XLNX) and Broadcom (NASDAQ:AVGO) will not supply the Chinese company until further notice, according to a Bloomberg report.

S&P 500 technology stocks dropped 2.2%, the largest percentage decline among the benchmark index's 11 major sectors. The Philadelphia Semiconductor Index, which includes Huawei suppliers Qualcomm Inc , Micron Technology Inc (NASDAQ:MU) and Broadcom Inc, tumbled 4.6% to touch its lowest level in more than two months.

Shares of Apple Inc (NASDAQ:AAPL) slumped 3.8% to weigh most heavily on Wall Street's major indexes. The iPhone maker's shares were also pressured by a warning from HSBC that higher prices for the company's products following the latest increases in tariffs could have "dire consequences" on demand.

"The political risk now has become a business risk," said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey. "This could affect in a meaningful way earnings expectations for many tech names."

The Dow Jones Industrial Average fell 165.87 points, or 0.64%, to 25,598.13, the S&P 500 lost 28.13 points, or 0.98%, to 2,831.4 and the Nasdaq Composite dropped 135.89 points, or 1.74%, to 7,680.39.

After touching record highs at the beginning of May, Wall Street's main indexes have succumbed to selling pressure on mounting concerns about a prolonged U.S.-China trade war. The S&P 500 is on track to post its worst monthly decline since the December sell-off, trading nearly 4% off its all-time high.

Among gainers, shares of Sprint Corp and T-Mobile US Inc rose after Federal Communication Commission Chairman Ajit Pai came out in favor of the merger of the two telecom companies. Sprint and T-Mobile shares pared gains, however, after Bloomberg reported that the U.S. Department of Justice was leaning against approving the deal.

Still, Sprint shares were last up 15.9% while T-Mobile shares were 2.5% higher.

Dish Network Corp shares declined 6.0% after the company said it would buy broadcast satellite service assets from EchoStar Corp in an $800 million deal, though the shares pared losses in afternoon trading.

Declining issues outnumbered advancing ones on the NYSE by a 2.21-to-1 ratio; on Nasdaq, a 2.00-to-1 ratio favored decliners.

© Reuters. Traders work on the floor at the NYSE in New York

The S&P 500 posted 24 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 32 new highs and 140 new lows.

Latest comments

Oh man. China will probably open its markets soon than thought to foriegn investors. They had better... lies and manipulation only last so long.
It wil drop another 5-10%... I’ll buy it then.
I think we have to buy a little bit
I’d rather have hecho in Mexico than China.
Shi is liking it very much. Looks like US will recession before election if there are no deal. Then for sure, Trump will be out. Shi is president for life.
David, before China was invited into WTO, it was isolated and backward in every aspect of life, US had welcomed China in open arm to the international body by providing technology know-how and capital funding, China unfortunately abused that priviledge, now this is the watershed where China can either continue to merge and share values with the West or maintain an iron curtain around it. Let’s see which country will share the same vision as China on digital future. Game over
Interesting... You are missing an “r” in your last name ( insert cying laughing face here).
Usa own china over 1000 biljon dollars.... if they want they can make usa bankrupt
It will be suicidal for CCP as well
Lol hey genius if they called america on the debt they’d bankrupt themselves and bankrupt the world as well. Learn global economics
The situation is getting as messy as Trumps hair on a windy day. Xi is surely feeling heavy pressure right now as Trump is blatantly bullying Xi's friends. He has to choose between 'saving face' and buckling into the clowns demands or he has to have China suffer economically until the circus show in the White House is finished. But if Xi chooses the latter the ambitious 2025 plan may not come to fruition.
Xi only cares about himself and his regime, he doesn’t care about his people. Chinese people is only chips to him, so expect more Chinese state initiated anti-trump rhetoric from media and the discussion board here
Too funny. The companies that have been stealing ideas and intellectual property of ordinary Americans for centuries complain that China has stole their ideas. Too funny!
It’s a mafia government, they twist the truth to fit their state rhetoric, the world is going to see more of that as trade war deepens, it shows the world more and more the true color of Chinese governments’ core values, that is “CCP/Xi is the rule of land, the truth to anything and everything”
You listen to too much CNN news. Chinese people loves their ruler Shi. Chinese has this system for thousands of years, so stop trying to change how they operates. That is how they like it. They have a top down system. Is Confucius way.
Confucias? Haha, you just spoke the truth, that Chinese people prefer feudalism than democracy and freedom. If that is the case, Chinese can surely guard the iron curtain CCP has installed and enjoy the fun all by themselves,
China should be about finished after today.
Huawei is a big customer of American semi companies, these American suppliers represent nearly 25% of the chips, software and services that Huawei uses. This is second to the 30% that Chinese suppliers represent. We are hurting ourselves by these Trump tariffs and sanctions against Huawei. Trump is a riverboat gambler that is now playing craps with the American economy, unless his trade actions can bring manufacturing jobs back to America, having American companies moving their plants and manufacturing to places like India, Vietnam, Indonesia etc helps no one in the US.
Hmm, okay
The supply chain will be shifted to places that holds the same value and not by an authoritarian regime, that is the difference
Likely will refocus to india and asia ....
The impact of one single Chinese company should speak volumes.
Well said
Lets see how market will behave without massive buybacks
reducing china's influence everywhere is the new world order.
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