Tech Stocks Lead Wall Street Lower After Micron Warning

After ending Monday’s trading little changed, stocks moved mostly lower over the course of the trading session on Tuesday. The major averages all moved to the downside, with the tech-heavy Nasdaq showing a particularly steep drop.

The Nasdaq tumbled 150.53 points or 1.2 percent to 12,493.93 and the S&P 500 fell 17.59 points or 0.4 percent to 4,122.47. Meanwhile, the Dow posted a more modest loss, edging down 58.13 points or 0.2 percent to 32,774.41.

Technology stocks helped to lead Wall Street lower, as reflected by the sharp decline by the Nasdaq, which continued to give back ground after reaching a three-month intraday high in early trading on Monday.

Within the tech sector, semiconductor stocks turned in some of the worst performances, resulting in a 4.6 percent nosedive by the Philadelphia Semiconductor Index.

The sell-off by semiconductor came following a warning from Micron Technology (MU), with the memory chip maker tumbling by 3.7 percent.

Micron warned revenue for the current quarter may come in at or below the low end of its previous guidance, citing “macroeconomic factors and supply chain constraints.”

The news from Micron came after a warning from graphics chip maker Nvidia (NVDA) contributed to the pullback by the markets on Monday.

Computer hardware stocks also saw considerable weakness on the day, with the NYSE Arca Computer Hardware Index slumping by 2.2 percent after ending the previous session at a two-month closing high.

Outside of the tech sector, airline stocks moved sharply lower, dragging the NYSE Arca Airline Index down by 3.6 percent. The index also ended the previous session at its best closing level in two months.

Housing, biotechnology, and retail stocks are moved, while energy stocks bucked the downtrend despite a decrease by the price of crude oil.

The weakness on Wall Street also came as traders looked ahead to the release of a highly anticipated reading on U.S. consumer price inflation on Wednesday.

The report is expected to show consumer prices edged up by 0.2 percent in July after jumping by 1.3 percent in June. The annual rate of growth is expected to slow to 8.7 percent from a four-decade high of 9.1 percent.

Core consumer prices, which exclude food and energy prices, are expected to rise by 0.5 percent in July after climbing by 0.7 percent in June. Annual core consumer price growth is expected to accelerate to 6.1 percent from 5.9 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index rose by 0.3 percent.

The major European markets also ended the day mixed. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index fell by 0.5 percent and the German DAX Index slumped by 1.1 percent.

In the bond market, treasuries moved back to the downside following the rebound seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.2 basis points to 2.797 percent.

Looking Ahead

Trading on Wednesday is likely to be driven by reaction to the report on consumer price inflation, which could impact the outlook for interest rates.

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