The S&P 500 and the Nasdaq tumbled on Wednesday as plunging microchip shares, in the face of potential escalation of U.S. trade conflicts with China, exacerbated the ongoing rotation out of megacap tech-related stocks.
Market Snapshot
The S&P 500 fell 1.39% to end the session at 5,588.27 points. The Nasdaq fell 2.77% at 17,996.94 points, while Dow Jones Industrial Average rose 0.59% to 41,198.08 points.
Market Movers
Nvidia was down 6.6% after falling 1.6% on Tuesday, Micron Technology declined 6.3% after dropping 2.6% in the previous session, and server maker Super Micro Computer was down 6.9% after finishing down 2.3% on Tuesday. Advanced Micro Devices and Applied Materials also tumbled Wednesday, falling about 10% each.
ASML Holding, the Dutch semiconductor-manufacturing equipment company, reported second-quarter earnings and orders that topped analysts’ expectations. But the stock was down 13% after a Bloomberg report said the Biden administration has told allies it is considering using the most severe trade restrictions available on exports to China if companies such as ASML continue selling chipmaking machinery to the country.
U.S.-listed shares of Taiwan Semiconductor Manufacturing fell 7.9% after former President Donald Trump said in an interview that Taiwan should be paying the U.S. for defense.
Intel, in contrast, was up 0.4% because it is being seen as a beneficiary of increased export restrictions. It is widely regarded as the only viable domestic alternative with the ability and scale to make chip manufacturing work at large volumes.
J.B. Hunt Transport Services was down 6.9%. Second-quarter earnings of $1.32 a share from the trucking company fell from $1.81 a year earlier and missed analysts’ estimates. Sales at J.B. Hunt fell 7% in the period to $2.93 billion, while analysts expected $3.02 billion.
Spirit Airlines fell 11% after the budget carrier reduced its sales forecast for the second quarter. It said it expects revenue of about $1.28 billion, below previous expectations, “due to lower-than-expected non-ticket revenue.”
Five Below was down 25% after the discount retailer announced CEO Joel Anderson, who led the company for nearly a decade, was stepping down. Five Below said it expects second-quarter sales of between $820 million and $826 million, down from a prior forecast of $830 million to $850 million.
GitLab jumped 9.3% following a report from Reuters that said the software company was exploring a sale after attracting interest from potential buyers. Stock in Datadog , named as a potential suitor, fell 7.4%.
Johnson & Johnson reported adjusted second-quarter earnings of $2.82 a share, topping analysts’ expectations of $2.71, and improving from a year earlier. The pharmaceutical company reduced its estimate for adjusted earnings in 2024 to $9.97 to $10.07 a share, from its previous view of $10.57 to $10.72. The stock rose 3.7%.
Market News
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The U.S. central bank's latest temperature check on the health of the economy also showed that inflation pressures increased at a modest pace with most Fed districts reporting input costs were beginning to stabilize.
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