Wall Street ends sharply lower as chipmakers and megacaps slide
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[September 16, 2023] By
Noel Randewich and Ankika Biswas
(Reuters) - 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.
Chip equipment makers Applied Materials, Lam Research and KLA Corp all
dropped more than 4%after Reuters reported TSMC had asked its major
vendors to delay deliveries.
Nvidia dropped 3.7%, Advanced Micro Devices lost 4.8% and Broadcom and
Micron Technology 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.
China's industrial output grew more than expected in August, data
showed, suggesting that a recent flurry of support measures may be
starting to slowly stabilize a stumbling economic recovery.
Data on Thursday showed U.S. retail sales rose more than expected in
August, easing worries about a recession.
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Treasury yields edged higher ahead of the Federal Reserve policy meeting
next week, with the central bank facing a strong U.S. economy with
inflation that remains above target.
"We really continue to see that growth resilience story, and I think
that's difficult for the market simply because there's concern about
what that could mean both for rates and inflation," said Lisa Erickson,
head of public markets at U.S. Bank Wealth Management in Minneapolis.
Traders' bets on the Fed holding rates steady in its Sept. 20 policy
meeting remained at 97%, while their odds for a pause in November stood
at 67%, according to the CME FedWatch Tool.
Among growth stocks sensitive to higher interest rates, Amazon and
Microsoft each lost more than 2%, and Meta Platforms declined 3.7%.
Adobe dropped 4.2% to a more than two-week low after the Photoshop
software maker disclosed a commercial paper program of up to $3 billion
on Sept. 8 following its third-quarter results.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., August 29, 2023. REUTERS/Brendan McDermid
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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.
With the expiry of quarterly derivatives contracts tied to stocks,
index options and futures, volume on U.S. exchanges was heavy, with
16.9 billion shares traded, compared to an average of 9.8 billion
shares over the previous 20 sessions.
All 11 S&P 500 sector indexes declined, led lower by information
technology, down 1.95%, followed by a 1.88% loss in consumer
discretionary.
For the week, the S&P 500 fell 0.16% and the Nasdaq lost 0.39%. The
Dow added 0.12%.
SoftBank's Arm Holdings fell 4.5% after a stellar Nasdaq debut on
Thursday that rekindled expectations of a turnaround in the initial
public offering market.
Arm's strong debut prompted grocery delivery app Instacart to raise
the proposed price range for its IPO to target a fully diluted
valuation of up to $10 billion.
Neumora Therapeutics, 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.
Declining stocks outnumbered rising ones within the S&P 500 by a
4.4-to-one ratio.
The S&P 500 posted seven new highs and eight new lows; the Nasdaq
recorded 48 new highs and 216 new lows.
(Reporting by Ankika Biswas and Shristi Achar A in Bengaluru, and by
Noel Randewich in Oakland, California; Editing by Vinay Dwivedi and
Richard Chang)
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