Update: US Equity Indexes Decline Amid Hard Sell-Off in Chipmakers
(Updates with index/price moves and analysts' comments from the first paragraph.)US equity indexes slumped as profit-taking in mega-cap semiconductor names pushed the Nasdaq Composite and the S&P 500 sharply lower on Tuesday.The tech-heavy Nasdaq sank 2.2% to 25,587.04, the S&P 500 dived 1.4% to 7,365.46, and the Dow Jones Industrial Average slipped less than 0.1% to 51,666.84 at the close. Technology, industrials, and materials were the standout decliners, while consumer staples, real estate, and health care topped the gainers.In a category of stocks with a market capitalization of over $200 billion, 18 out of the 20 worst-performing stocks were technology firms. Sandisk (SNDK), Micron Technology (MU), and Arm (ARM) were the steepest decliners, sinking by at least 10% each. Within technology, semiconductors bore the brunt of investors' apathy.The sharp selling is likely profit-taking after market exuberance pushed tech stocks to record highs this year, Javier Correonero, Morningstar senior equity analyst, said in a news report published on the company's website. "There's a lot of froth in the markets."Tech stocks may face spillover impact from the selloff in South Korea, though the slide appears to be a "pullback/breather" in a market that nearly doubled this year, Wedbush Securities said in a note."We view the KOSPI sell-off as a pullback/breather on a market up almost 100% this year and also believe [SK Hynix, an affiliate of SK Telecom (SK)] overtaking Samsung was a big symbolic move that caused some investors to worry about an 'overheated' memory chip trade," Wedbush analysts, including Dan Ives, said in the note.Offering a different viewpoint on market moves, the Wells Fargo Investment Institute said in a research note that stocks often weaken before elections, referring to the US midterm polls in November. "Markets typically respond to a clearer policy outlook, so long-term investors should stay focused on fundamentals and consider adding equity exposure during election-driven pullbacks."In geopolitical news, President Donald Trump told reporters outside the White House that International Atomic Energy Agency inspectors will be heading to Iran, according to a report from Al Jazeera. In response to a journalist who said that Tehran claims that there are no scheduled IAEA visits, Trump said: "They're wrong, they know they're wrong. They told us inside, and we have it down 100 percent. If they were right, I'd cancel the meetings right now."Separately, Iran's President Masoud Pezeshkian said no negotiations will take place on the country's ballistic missiles, Al Jazeera reported.Front-month global benchmark North Sea Brent retreated 1.2% to $76.95 per barrel, and the US West Texas Intermediate slid 1% to $73.13 per barrel, with both crude oil types off session lows.In economic news, the June flash reading of manufacturing conditions from S&P Global rose to a 49-month high of 55.7 from 55.1 in May, in contrast with an expected decrease to 54.6 in a survey compiled by Bloomberg.Most US Treasury yields fell, but were off session lows. The 10-year slipped one basis point to 4.5%, and the two-year rate declined 2.7 basis points to 4.2%.In precious metals, gold futures dropped 1.8% to $4,129.00, and silver futures slumped 6.1% to $62.01.
