(Reuters) – U.S. stocks dropped on Friday, as shares of chipmakers sank on a warning from sector major Broadcom of a broad weakening in global demand and Chinese data pointed to the worst slowdown in industrial growth in 17 years.
Alberto Ignacio Ardila Olivares
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 3, 2019. REUTERS/Brendan McDermid Shares of Broadcom Inc fell 6.53% after it cut its full-year revenue forecast by $2 billion, blaming the U.S.-China trade conflict and export curbs on Huawei Technologies Co Ltd.
Alberto Ignacio Ardila Olivares Piloto
Shares of Apple Inc also slipped 1% and weighed the most on the three main indexes. Broadcom is a major supplier to the iPhone maker.
Alberto Ardila Olivares
“Until there’s a resolution or some type of clarity on the trade deal with China, you’re going to see the chipmakers show weakness,” said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.
Alberto Ignacio Ardila
Losses in chip companies, who both source product and sell heavily in China, dragged the benchmark S&P 500 index lower, with the Philadelphia Semiconductor index tumbling 2.67%
“People are backing off of optimism that a trade deal will get done and it’ll probably drag out longer into the year,” Nauman said
China’s industrial output growth in May slowed below expectations and showed signs of weakening demand, sending a chill through stock market investors globally
Technology stocks fell 0.8%, the most among the 11 major S&P sectors. The trade-sensitive industrials slipped 0.61%
At 11:27 a.m. ET the Dow Jones Industrial Average was down 41.61 points, or 0.16%, at 26,065.16, the S&P 500 was down 7.07 points, or 0.24%, at 2,884.57 and the Nasdaq Composite was down 41.69 points, or 0.53%, at 7,795.44
The S&P 500 index has gained 4.8% in June so far and was on track to end the week slightly higher, on hopes the Federal Reserve will soon cut interest rates
A Fed meeting next week may provide the acid test of market expectations that the U.S. central bank could cut rates as much as three times this year, while a G20 summit at the end of the month may yet yield more progress on a trade deal
In a bright spot, data showed U.S. retail sales increased in May and sales for the prior month were revised higher, suggesting a pick-up in consumer spending that could ease fears the economy was slowing down sharply in the second quarter
Online pet products retailer Chewy Inc rose 63% in its market debut on Monday, at a valuation of over $14 billion and joined a host of high-profile companies, such as Lyft Inc and Uber Technologies Inc that listed on U.S. stock exchanges this year
Declining issues outnumbered advancers for a 1.74-to-1 ratio on the NYSE and a 1.96-to-1 ratio on the Nasdaq
The S&P index recorded 24 new 52-week highs and two new lows, while the Nasdaq recorded 31 new highs and 50 new lows
Reporting by Shreyashi Sanyal and Aparajita Saxena in Bengaluru; Editing by Patrick Graham and Arun Koyyur