09 Aug , 2022 By : kaushiki Mehta
Aug 9: The tech-heavy Nasdaq fell on Tuesday after a dismal forecast from Micron Technology dragged chip and technology stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate-hike plans.
A high inflation print on Wednesday, following last week's strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.
Traders see a 70% chance of the Fed raising interest rates by 75 basis points in September, its third such big hike.
Rate-sensitive growth and technology stocks slipped as U.S. Treasury yields climbed, with megacaps such as Alphabet Inc and Tesla Inc down more than 1?ch.
Three of the 11 major S&P 500 sectors fell in early trading, with consumer discretionary, information technology and communication services stocks down between 0.8% and 1.4%.
Micron Technology Inc slid 2.4% as the memory-chip maker cut fourth-quarter revenue forecast and warned of a negative free cash flow in the following quarter as demand for chips used in personal computers and smartphones drop.
The broader Philadelphia Semiconductor Index declined 2.8% for its third straight session, while peers Nvidia and Advanced Micro Devices slipped more than 2?ch, extending sharp losses from the previous session after a revenue warning from Nvidia.
"Markets are still treating these things as companies specific. If you get enough similar warnings, investors will start to treat it as sector specific and if that goes on further then it will become market specific," said Michael Shaoul, chief executive officer at Marketfield.
Shaoul said trading volumes remained lower due to summer and "it really doesn't take a lot of capital to push over yields or the S&P"
At 9:41 a.m. ET, the Dow Jones Industrial Average was up 10.35 points, or 0.03%, at 32,842.89, the S&P 500 was down 9.53 points, or 0.23%, at 4,130.53, and the Nasdaq Composite was down 118.43 points, or 0.94%, at 12,526.03.
Despite a choppy recovery since mid-June, the benchmark index is down 13.4% this year after hitting a record high in early January as surging prices, hawkish central banks, geopolitical tensions weigh on sentiment.
Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to the Refinitiv data as of Friday.
U.S. vaccine maker Novavax slumped 25.3?ter it halved its annual revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States amid a global supply glut and soft demand.
Declining issues outnumbered advancers for a 1.28-to-1 ratio on the NYSE and a 1.96-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 30 new lows, while the Nasdaq recorded 22 new highs and 17 new lows.