Dow’s Sudden Rally Erases 118 Point Loss Despite Chip Stock Meltdown
By CCN Markets: The Dow and broader U.S. stock market limped into Friday’s close after disappointing financial results from a leading chipmaker highlighted the dangers of a prolonged trade war with China.
Dow Pares Losses; Nasdaq Endures Tech Blowback
All of Wall Street’s major indexes struggled out of the gate Friday, reflecting a weak pre-market for Dow futures. The Dow Jones Industrial Average was down 118 points before rebounding later in the day. It last traded at 26,139.99 for a gain of 33.22 points or 0.13%.
The Dow bounced back from a 118 point loss to mount a minor gain. | Source: Yahoo Finance
The broad S&P 500 Index of large-cap stocks edged up 1.27 points or 0.04% to 2,892.91. Losses were concentrated in five primary sectors, with energy and technology among the biggest decliners. Utilities outperformed, rising 1.18% as a group, while real estate and communications each rose at least 0.5%.
Meanwhile, the technology-focused Nasdaq Composite Index fell 0.28% to 7,815.45.
Broadcom’s Top Line Disappoints
Broadcom Inc. posted better than expected earnings results late Thursday but said revenues came in below expectations due to U.S.-China trade uncertainty. | Source: Shutterstock.
Semiconductor stocks plunged anew on Friday after Broadcom Inc. (NASDAQ: AVGO), a leading chipmaker, reported disappointing quarterly revenues and downgraded its outlook on fiscal 2019.
The San Jose-based company generated $5.52 billion in sales for its fiscal second quarter, well below forecasts calling for $5.68 billion. As a result, the company slashed its full-year sales estimates to $22.60 billion, well below the $24.31 billion expected by analysts.
Geopolitical uncertainties and export restrictions were cited as the main reasons for the disappointing sales numbers. Broadcom also said it would generate $2 billion less in annual revenue following the U.S. government’s ban on Huawei, China’s largest telecommunications company. As CNBC noted, Broadcom made about $900 million in sales from Huawei last year.
Broadcom’s share price declined by as much as 8.5% on Friday, dragging other telecom stocks along for the ride. AVGO shares last traded at $266.64 for a loss of 5.32%.
U.S.-China trade tensions have escalated over the past two months as a final agreement continues to elude negotiators. Beijing reportedly backed out of a deal in early May, prompting the Trump administration to pursue stiffer tariff penalties.
Presidents Trump and Xi Jinping are scheduled to hold face-to-face talks at the upcoming G20 summit in Osaka, Japan. It was previously hoped that the venue would allow both sides to finalize a trade agreement.
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Published at Fri, 14 Jun 2019 19:40:42 +0000