Wall Street's record-breaking rally ran into a wall on Wednesday as worries about potentially worsening trade tensions with China hit stocks of chip companies. That dragged indexes to their worst day in months on Wednesday, but conditions were less discouraging underneath the surface, the AP reports.
- The S&P 500 slumped 1.4% a day after setting an all-time high for the 38th time this year, though slightly more stocks in the index rose than fell.
- The Nasdaq composite slumped 2.8%, its worst day since 2022, weighed by losses for Nvidia, Apple, and other heavyweights.
- The Dow Jones Industrial Average added 243 points, or 0.6%, to its record set a day earlier.
The mix offers a continuation of a recent trend that market watchers have called encouraging, one where more stocks are rising rather than just a handful of overpowering elites. The market's spotlight, however, was squarely on chip companies, which tumbled after a report from Bloomberg said President Biden is considering the most severe trade restrictions available if companies like the Netherlands' ASML and Japan's Tokyo Electron continue to ship advanced semiconductor technology to China.
ASML saw its stock trading in the United States drop 12.7% even though it reported sales for the spring that came in at the high end of its forecasted range. Shares of Tokyo Electron, meanwhile, dropped 7.5% in Tokyo to cull its gain for the year to 32.2%. Another major chip company, Taiwan Semiconductor Manufacturing Co., sank 8% after Donald Trump criticized the self-governed island claimed by Beijing, which the US is obligated by treaty to defend if it is attacked. "Taiwan should pay us for defense," he said in a Bloomberg interview. "Taiwan took our chip business from us, I mean, how stupid are we?"
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Among big US players in the chip market, Nvidia fell 6.5% after soaring 155.2% this year through the day before. Advanced Micro Devices fell 10.2%, and Broadcom dropped 7.9%.
- Johnson & Johnson, whose stock had been down for the year so far, jumped 3.7% after topping analysts' forecasts for profit in the latest quarter. It was one of the largest reasons the Dow Jones Industrial Average was able to rise despite falls for each of the Magnificent Seven stocks: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.
- US Bancorp, which has also lagged the rest of the market this year, rallied 4.6% after topping analysts' forecasts for profit and revenue.
- Five Below, a retailer targeting teens and tweens with products priced at $5 or below, tumbled 25.1% after its CEO, Joel Anderson, stepped down from his job and from the board. It also gave a profit forecast for the second quarter that fell short of analysts' expectations.
- Spirit Airlines lost 10.8% after the discount carrier cut its forecast for revenue in the second quarter. It said it's making fewer dollars than expected from fees outside of tickets.
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