U.S. stocks closed sharply lower Wednesday, with the chip sector suffering its biggest single-day decline in more than two years, as investors reacted to presidential frontrunner Donald Trump's Taiwan-related comments that rattled global markets.
Nvidia lead the chip stock decline, falling more than 6.6% and shedding some $200 billion in market value, as the Nasdaq ended 512 points, or 2.77% lower by the close of trading.
The S&P 500, meanwhile, was marked 78 points, or 1.39% lower at the closing bell, with the ongoing rotation into value and domestic-focused stocks lifting the Dow 243 points to a fresh record high of just under 42,000 points.
The chips are dipping ... worst day for S&P 500 Semiconductor industry since March 2020 pic.twitter.com/wr2SiXkACQ
— Kevin Gordon (@KevRGordon) July 17, 2024
Updated at 12:55 PM EDT
Tech tumble
The Nasdaq was last marked 528 points, or 2.86% lower in early afternoon trading, putting the tech-focused index on pace for its biggest single-day decline of the year, as megacap tech and chip stocks continue to slide on geopolitical risks tied to comments from former President Donald Trump and reports of extended export restrictions under President Joe Biden.
The Philadelphia Semiconductor Sector index, the chip sector benchmark, was last seen 5.33% lower on the session, with Nvidia down 6.9% and Micron falling 5.4%.
Nasdaq's 2.5% decline today has been triggered by a vortex of geopolitical comments from Trump and Biden. In the near term (the next 1-3 years) politics and regulation can slow AI’s progress by making it more expensive to get access to the underlying hardware.
— Gene Munster (@munster_gene) July 17, 2024
This too will…
Updated at 11:22 AM EDT
Tesla tilt
Tesla (TSLA) shares paused their extraordinary summer surge Wednesday despite a bullish note from Barclays that lifted the bank's price target on the stock but cautioned that it could face near-term headwinds from a muted second quarter earnings report next week.
Tesla will report for Q2 after the close of trading July 23, with analysts expecting a bottom line of 62 cents a share on revenue of around $24.72 billion.
Related: Analyst revisits Tesla stock price target ahead of Q2 earnings
Updated at 9:43 AM EDT
Opening slump
The S&P 500 was marked 52 points lower, or 0.91%, in the opening minutes of trading, with the Nasdaq down 316 points, or 1.7%, with chips stocks leading the declines.
The Philadelphia Semiconductor Sector index, the chip sector benchmark, was last seen 3.4% lower on the session, with Nvidia down 4.4% and AMD down 6.25%.
S&P 500 Opening Bell Heatmap (Jul. 17, 2024)$SPY -0.84%🟥$QQQ -1.60%🟥$DJI +0.15%🟩$IWM -0.23%🟥 pic.twitter.com/dWpMDoE0qd
— Wall St Engine (@wallstengine) July 17, 2024
Updated at 8:37 AM EDT
Housing bump
U.S. housing starts quickened modestly in June, the Commerce Department said, rising to an annual pace of 1.353 million units, with permits for new construction up 3.4% to 1.446 million units.
That said, single-family units starts were down 2.2% from May levels, tied in part to average mortgage rates of more than 7% over the month of June, adding to further pressure on supply in the market's most-important sector.
US Housing Starts Jun: 1.353M (est 1.300M; prev R 1.314M)
— LiveSquawk (@LiveSquawk) July 17, 2024
- Housing Starts (M/M): 3.0% (est 1.8%; prev R -4.6%)
- Building Permits: 1.446M (est 1.400M; prev R 1.399M)
- Building Permits (M/M): 3.4% (est 0.1%; prev R -2.8%)
Stock Market Today
Stocks scaled another set of record highs Tuesday, with the Dow surging 743 points, or 1.85%. Markets extended their recent rally on the back of bets that a second Trump administration would benefit U.S. companies and economic data suggesting the Federal Reserve would begin cutting interest rates as early as September.
Markets look set to give back a chunk of those gains today, however, following remarks from Trump in an interview with Bloomberg Businessweek. In the discussion he appeared to waver from the U.S.'s commitment to protect Taiwan, which sits just 81 miles from China's mainland but has operated independently since 1949.
“Taiwan took our chip business from us,” Trump said. “I mean, how stupid are we? They took all of our chip business. They’re immensely wealthy.”
Semiconductor stocks tumbled in overnight trading: Taiwan Semiconductor (TSM) , the world's biggest contract manufacturer, shed more than $30 billion in market value, and Europe's ASML (ASML) fell 7.3% in Amsterdam despite stronger-than-expected second-quarter earnings from the chip design maker.
Nvidia (NVDA) , Advanced Micro Devices (AMD) and Micron Technology (MU) were all marked firmly lower in premarket trading as well, pulling Nasdaq futures down more than 245 points heading into the start of trading.
Related: Investors reset bets for stocks, bonds after Trump shooting
Futures contracts tied to the S&P 500 are also indicating a big opening bell decline of around 40 points. That market move is tied to both the outsized moves in chip stocks and to reports that both Trump and President Joe Biden would be willing to enhance tariffs on China-made goods as part of their broader economic policies.
The Dow Jones Industrial Average, meanwhile, is called just 67 points lower as investors continue to rotate from megacap tech stocks to domestic value stocks on the back of a presumed Trump win in November. That rotation has also lifted the small-cap Russell 2000 more than 10% over the past five days to the highest levels of the year.
The US Small Cap ETF is up 10.4% in the last 4 trading days and has outperformed the S&P 500 ETF by 9.8% over that period, the largest 4-day outperformance on record. $IWM $SPY
— Charlie Bilello (@charliebilello) July 16, 2024
Chart of the Day: https://t.co/MfCOXKYVb1 pic.twitter.com/9nigdfZEeT
Other stocks on the move heading into the start of the trading day include Johnson & Johnson (JNJ) . The stock rose 1.3% after the health-care group posted stronger-than-expected second-quarter earnings but trimmed its full-year profit forecast in line with new accounting rules from the Securities and Exchange Commission.
In the bond market, benchmark 10-year Treasury note yields were holding at 4.171% in early New York trading ahead of housing-starts data for June at 8:30 a.m. U.S. Eastern Time. Two-year notes were changing hands at 4.457%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.57% lower at 103.698 following market reaction to Trump's comments in the Bloomberg interview.
More Wall Street Analysts:
- Analyst revisits Nvidia stock price target after Blackwell checks
- Analysts prescribe new Walgreens stock price targets after earnings
- Analyst revises Facebook parent stock price target in AI arms race
Overseas, Europe's Stoxx 600 index fell 0.44% in Frankfurt, with tech stocks leading declines. Britain's FTSE 100 rose 0.04% despite a hot domestic inflation reading for June that could challenge Bank of England rate-cut bets.
Overnight in Asia, Japan's Nikkei 225 ended 0.43% lower in Tokyo, as the yen improved to 156.38 against the U.S. dollar and tech stocks slumped. The regionwide MSCI ex-Japan index edged 0.02% higher into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
