Renewable Energy

Wall Street drops as tech stocks tumble on Huawei fallout fears


U.S. stocks fell on Monday, as a crackdown on China's Huawei Technologies raised concerns of a bigger impact on chipmakers and added to fears of an escalation in trade war between the two nations.

By Shreyashi Sanyal

May 20 (Reuters) - U.S. stocks fell on Monday, as a crackdown on China's Huawei Technologies raised concerns of a bigger impact on chipmakers and added to fears of an escalation in trade war between the two nations.

Apple Inc AAPL.O slumped 3.84%, weighing the most on the three main indexes. The S&P 500 technology sector .SPLRCT slipped 1.95%, the biggest drop among the nine major S&P sectors trading lower.

The iPhone maker was also pressured by a warning from HSBC that higher prices for the company's products following the increases in tariffs could have "dire consequences" on demand.

U.S. suppliers of Huawei HWT.UL, including Qualcomm QCOM.O, Micron Technology MU.O and Broadcom Inc AVGO.O, fell about 5%, while the Philadelphia Semiconductor Index .SOX slid 2.88%, its lowest level in over two months.

"For a lot of these tech companies, there is no bigger market than China and there is some concern it could forestall growth, also forces countries to take sides and begin to allow China to develop alternatives," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

"It's a lot of speculation and there isn't any basis. But it looks like the trade talks are getting worse and not better."

Huawei, the world's largest telecoms equipment maker, was added to a trade blacklist by the Trump administration on Thursday, escalating the already bitter trade war, while China on Monday accused the United States of harboring "extravagant expectations" for a trade deal.

Underscoring a likely hit to U.S. tech companies, Lumentum Holdings Inc LITE.O said it would halt shipments to Huawei and cut its quarterly revenue expectations. Shares of Lumentum fell 2.68%.

Alphabet Inc's GOOGL.O Google has suspended some business with Huawei, Reuters reported over the weekend, while chipmakers including Intel Corp INTC.O, Qualcomm, Xilinx Inc XLNX.O and Broadcom have told employees that they will not supply the Chinese company until further notice, Bloomberg reported on Sunday.

Shares of Alphabet, Facebook Inc FB.O and Microsoft Corp MSFT.O were all down over 2%.

In a bright spot, Sprint Corp S.N shares jumped 23%, while T-Mobile US Inc TMUS.O gained 5.2% after the companies won support of the U.S. telecoms regulator chairman for their proposed $26 billion merger.

Verizon Communications Inc's VZ.N 3.5% gain helped the Dow index limit some losses, while shares of AT&T Inc T.N rose 3%

At 9:45 a.m. ET, the Dow Jones Industrial Average .DJI was down 132.17 points, or 0.51%, at 25,631.83. The S&P 500 .SPX was down 20.89 points, or 0.73%, at 2,838.64 and the Nasdaq Composite .IXIC was down 125.77 points, or 1.61%, at 7,690.51.

Investors will also look for comments from a clutch of retailers reporting this week including Home Depot HD.N, Nordstrom JWN.N, Kohl's KSS.N and Target TGT.N for comments on the impact of the latest round of tariffs.

With 460 of S&P 500 companies having posted first-quarter results, 75.2% have topped analysts' profit expectations. Analysts now expect first-quarter earnings growth of 1.4%, a sharp turnaround from the 2% loss expected on April 1, according to Refinitiv data.

Declining issues outnumbered advancers for a 2.58-to-1 ratio on the NYSE and for a 3.00-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and seven new lows, while the Nasdaq recorded 11 new highs and 71 new lows.

(Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

((; +1 646 223 8780 ; Reuters Messaging:

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Energy Videos

How the EU Energy Crisis and Great Resignation Could Impact Social KPIs

Sep 15, 2022


Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at and via Reuters TV.

Learn More