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Nasdaq falls 1% as warning from chipmaker Micron reignites tech recession

Markets remain on the sidelines ahead of inflation data reflected in the U.S. Federal Reserve’s rate hike plans, while tech stocks fall after Micron’s pessimistic forecasts pull chip and tech stocks lower. The Nasdaq fell on Tuesday. High inflation pressures on Wednesday following last week’s strong employment numbers could lead the Fed to continue its aggressive rate hikes, weighing down the recent rebound in equities.

Micron Technology Inc fell 4.8% after memory chip makers cut their fourth-quarter earnings guidance and warned that weak demand for chips for PCs and smartphones would result in negative free cash flow next quarter. His heavyweight rivals Nvidia and Advanced Micro Devices each dropped about 4%, continuing a significant drop from the previous session after a sales warning from Nvidia.

Traders see him as 70% likely that the Fed will raise interest rates by 75 basis points in September. In addition to concerns about a tight labor market and inflation, data showed that US worker productivity plummeted in the second quarter, marking a record annual decline. Five of the S&P 500’s 11 major sectors fell, with consumer goods, information technology and communications services stocks down between 0.7% and 1.5%.

Robert Stimpson, chief investment officer at Oak Associated Fund, said: “What the market saw in July could be a counter-trend rally in a deteriorating economy for both companies. There is a growing awareness of the high. The broader Philadelphia Semiconductor Index is down about 7% over the past three sessions.

MarketField Chief Executive Michael Shaul said chip stocks were unfazed by the bill because it was “totally cheap.” Shaoul said trading volumes remained low due to the summer and that “it doesn’t take yield or a lot of capital to beat his S&P.”

Meanwhile, U.S. President Joe Biden has offered his $52.7 billion in subsidies to U.S. semiconductor production and research to make the U.S. more competitive to China’s science and technology efforts. Signed a landmark bill to strengthen our efforts.

Rate-sensitive growth and tech stocks fell as US Treasury yields rose, while megacaps such as Alphabet and Tesla each fell more than 1%. As of 11:41 a.m. ET, the Dow Jones Industrial Average is down 7.49 points (0.02%) to 32,825.05, the S&P 500 is down 12.96 points (0.31%) to 4,127.10, and the Nasdaq Composite is down 138.44 points (1.09). ) fell. 12,506.02 in %.

Despite a sharp recovery since mid-June, the benchmark index is up 13.5% this year after hitting a record high in early January, with inflation, restrictive central banks and geopolitical tensions weighing on the economy. is falling. Refinitiv data on Friday showed 77.5% of S&P 500 companies beat expectations, with US corporate earnings beating expectations.

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  • Nasdaq falls 1% as warning from chipmaker Micron reignites tech recession
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