U.S. stocks ended sharply lower on Friday as chipmakers dropped on concerns about weak consumer demand, while rising Treasury yields pressured Amazon and other megacap growth companies.
Market Snapshot
The S&P 500 dropped 1.22% to end at 4,450.32 points. The Nasdaq declined 1.56% to 13,708.34 points, while the Dow Jones Industrial Average fell 0.83% to 34,618.24 points.
Market Movers
Chip equipment makers Applied Materials (AMAT), Lam Research (LRCX) and KLA Corp (KLAC) all dropped more than 4% after Reuters reported TSMC (TSM) had asked its major vendors to delay deliveries.
Nvidia (NVDA) dropped 3.7%, Advanced Micro Devices (AMD) lost 4.8% and Broadcom (AVGO) and Micron Technology (MU) each fell over 2%, pulling down the Philadelphia Semiconductor index down about 3% for the session.
Stoking worries over chip demand from automakers, the United Auto Workers' union launched simultaneous strikes at factories of General Motors, Ford and Chrysler parent Stellantis.
Arm Holdings (ARM) fell 4.5% after the U.K. chip design company closed its first day of trading Thursday at $63.59, 25% above the initial public offering price. The IPO for ARM, which provides chip designs to a range of semiconductor manufacturers, including the processor designs used in essentially every current smartphone, was the biggest of the year.
Ford (F) fell 0.1%, General Motors (GM) gained 0.9%, and Stellantis (STLA) closed up 2.2%. The shares had traded lower in the premarket session after the United Auto Workers union launched its first-ever partial strike against the car companies following a failure of the sides to reach a deal for a new contract ahead of a deadline just before midnight Thursday.
Walt Disney (DIS) gained 1.3% after a spokesman said the entertainment giant hasn’t yet decided what it will do with ABC and other traditional broadcast television channels. That followed a report from Bloomberg that said the company had held talks with Nexstar Media about selling the stations.
Adobe (ADBE) reported fiscal third-quarter adjusted earnings of $4.09 a share on revenue of $4.89 billion, higher than analysts’ estimates of $3.98 a share on revenue of $4.87 billion. The software company said it expects fourth-quarter earnings of $4.10 to $4.15 a share on revenue of $4.98 billion to $5.03 billion, versus Wall Street forecasts of $4.06 a share on revenue of $5 billion. Adobe shares fell 4.2%.
Nikola (NKLA) extended gains, rising 3.5% after closing 32% higher on Thursday after the electric-truck maker’s CEO said he sees the first hydrogen fuel cell trucks delivered by the end of the month.
Planet Fitness (PLNT) dropped 15.9% after the fitness chain announced the departure of CEO Chris Rondeau and named a new interim CEO, effective immediately. Rondeau has been at the helm since January 2013.
Apellis Pharmaceuticals (APLS) jumped 2.6% after shares of the drug developer were upgraded to Overweight from Equal Weight at Wells Fargo.
Nucor (NUE) fell 6.1% after the steel maker issued a fiscal third-quarter earnings outlook that missed estimates. Nucor said it expects earnings for its steel mills segment in the third quarter to fall from the second quarter “due to lower pricing, and to a lesser extent, volumes.”
Charles Schwab (SCHW) was down 2.6% after the financial services company reported net new assets for August fell to $4.9 billion, a drop the company attributed to temporary attrition of TD Ameritrade clients and advisors.
Copart (CPRT) was off 2.2% to $43.88 even after the provider of online vehicle auctions posted better-than-expected adjusted fourth-quarter earnings. Analysts at Baird also raised the price target on the stock to $48 from $45.
Neumora Therapeutics (NMRA), backed by Amgen and Japan's SoftBank, made a tepid debut at $16.50 per share, below its IPO price of $17. It ended at $16.25.
Market News
Fed losses breach $100 billion as interest costs rise
Federal Reserve losses breached the $100 billion mark, central bank data released on Thursday showed, and they're likely to go a lot higher before the red ink stops.
The U.S. central bank is continuing to pay out more in interest costs than it takes in from the interest it earns on bonds it owns and from the services it provides to the financial sector. While there's considerable uncertainty around how it will all play out, some observers believe Fed losses, which began a year ago, could eventually as much as double before abating.
William English, a former top central bank staffer now at Yale University, said he sees a "peak" loss of around $200 billion by 2025. Meanwhile, Derek Tang of forecasting firm LH Meyer said the loss is likely to be between $150 billion and $200 billion by next year.
UAW, automakers to resume talks as strike starts to create parts shortage
The United Auto Workers said it plans to resume bargaining on Saturday after the union launched simultaneous strikes at three factories owned by General Motors, Ford Motor and Chrysler parent Stellantis, on Friday.
The walkouts at the Detroit Three by 12,700 workers, kicking off the most ambitious U.S. industrial labor action in decades, are halting production of the Ford Bronco, Jeep Wrangler and Chevrolet Colorado, along with other popular models, though the action was smaller than some expected.
The ripple effects of the strike began to spread on Friday, as Ford told 600 workers who are not striking that they should not come to work on Friday and GM told some 2,000 workers at a Kansas car plant that their factory likely would be shut down next week for lack of parts, stemming from a nearby plant being struck.
ARM options to be available for trading on Monday after IPO
Nasdaq confirmed in an email that recent changes have enabled securities that meet certain criteria to have options listed on the second day after their IPO, compared with the old standard of four days. ARM is the first company to which the new standards will be applied, according to the exchange.
The Options Clearing Corporation listed 14 exchanges that would offer ARM options on Monday, in a spreadsheet on its website.
Arm debuted on Thursday, gaining 25% in its first day of trading. The stock pared some of those advances on Friday, dropping 4.5% in the session.