Dow Pares Triple-Digit Loss Despite Chip Stock Meltdown
The Dow was headed toward a triple-digit loss when a sudden rally flipped it green. Chips stocks, however, suffered a meltdown. | Source: AP/Richard Drew
By CCN.com: 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. By the end of trading, it was down 17.16 points, or 0.1%, to 26,089.61.
The broad S&P 500 Index of large-cap stocks declined 0.2% to 2,886.98. Information technology led five of 11 primary sectors lower. Within the tech sector, semiconductors plunged more than 2%.
Meanwhile, the technology-focused Nasdaq Composite Index fell 0.5% to close at 7,796.66.
Broadcom’s Top Line Disappoints
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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