Quantcast

US STOCKS-Wall Street drops as Broadcom warning hits chip sector


Shutterstock photo


(For a live blog on the U.S. stock market, click LIVE/ ortype LIVE/ in a news window.)

* Broadcom tumbles after warning of chip demand slowdown

* Tech down most among 11 major S&P sectors; Chips slide

* Data shows U.S. retail sales rise in May

* Indexes down: Dow 0.38%, S&P 0.37%, Nasdaq 0.64% (Updates to open)

By Shreyashi Sanyal

June 14 (Reuters) - Wall Street's main indexes dropped onFriday, as shares of chipmakers sank on a warning from sectormajor Broadcom of a broad weakening in global demand and Chinesedata pointed to the worst slowdown in industrial growth in 17years.

Shares of Broadcom IncAVGO.O plunged 6.83% after it cutits full-year revenue forecast by $2 billion, blaming theU.S.-China trade conflict and export curbs on HuaweiTechnologies Co LtdHWT.UL . urn:newsml:reuters.com:*:nL4N23K49T

Shares of Apple IncAAPL.O also slipped 1.66% and weighedthe most on the three main indexes. Broadcom is a major supplierto the iPhone maker.

"Broadcom is definitely leading markets lower and that mightdrive other chips lower as well. Some of it is also about theU.S.-China trade war and the fight over Huawei," said KimForrest, chief investment officer at Bokeh Capital Partners inPittsburgh.

Meanwhile, China's industrial output growth in May slowedbelow expectations and showed signs of weakening demand, sending a chill through stock market investors globally. urn:newsml:reuters.com:*:nB9N23B00Q

Losses in chip companies, who both source product and sellheavily in China, dragged the benchmark S&P 500 index .SPX lower, with the Philadelphia Semiconductor index .SOX tumbling3%. Technology stocks .SPLRCI fell 1.06%, the most among the11 major S&P sectors.

"China was to be expected because tariffs are having aneffect on them and that's starting to show up," Forrest said.

At 9:57 a.m. ET the Dow Jones Industrial Average .DJI wasdown 99.94 points, or 0.38%, at 26,006.83, the S&P 500 .SPX was down 10.68 points, or 0.37%, at 2,880.96 and the NasdaqComposite .IXIC was down 50.39 points, or 0.64%, at 7,786.74.

The S&P 500 index has gained 4.7% in June so far and was ontrack to end the week slightly higher, on hopes the FederalReserve will soon cut interest rates.

A Fed meeting next week may provide the acid test of marketexpectations that the U.S. central bank could cut rates as muchas three times this year, while a G20 summit at the end of themonth may yet yield more progress on a trade deal.

Data showed U.S. retail sales increased in May, althoughslightly below expectations, which could ease fears the domesticeconomy was slowing down sharply in the second quarter. urn:newsml:reuters.com:*:nLNSEHEF5I

"It's important to remember that softening economic datadoes not mean recessionary economic data," Mike Loewengart,vice-president of investment strategy at E*Trade Financial inNew York, said.

Declining issues outnumbered advancers for a 2.10-to-1 ratioon the NYSE and a 2.17-to-1 ratio on the Nasdaq.

The S&P index recorded 20 new 52-week highs and one new low,while the Nasdaq recorded 22 new highs and 30 new lows. (Reporting by Shreyashi Sanyal and Aparajita Saxena inBengaluru; editing by Patrick Graham and Arun Koyyur) ((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780 ;Reuters Messaging:Shreyashi.Sanyal.thomsonreuters.com@reuters.net))






This article appears in: World Markets , US Markets , Stocks
Referenced Symbols: AAPL ,



More from Reuters

Subscribe







See Reuters News













Research Brokers before you trade

Want to trade FX?