Stock Market News Today: Markets largely lower as global chip sell-off weighs (SP500)

Wall Street’s tech-heavy Nasdaq Composite (COMP:IND) on Wednesday plunged and was on track for its worst session of 2024, as chip stocks across the globe took a hit on U.S.-China trade curb worries.

On the other hand, the blue-chip Dow (DJI) surpassed the historic 41,000 points level for the first time ever, buoyed by yet another post-earnings jump in one of its components. It had climbed 0.47% to 41,146.16 points in afternoon trade.

The benchmark S&P 500 (SP500) also took it on the chin due to the weakness in semiconductors. The index was last down 1.41% to 5,587.44 points in midday trade, while the Nasdaq (COMP:IND) had slid 2.74% to 18,001.28 points.

Of the 11 S&P sectors, Technology and Communication Services unsurprisingly topped the losers, with the former shedding about 3.5% and the latter slipping more than 2%. Defensive sector Consumer Staples was the biggest gainer.

A Bloomberg report earlier in the day said that the U.S. government was mulling further export curbs on chip companies including Dutch giant ASML (ASML) if they continued to provide China access to advanced semiconductor technology.

The news sent U.S.-listed shares of ASML (ASML) slumping more than 11%, despite the company reporting strong bookings for its second quarter. American chip stalwarts such as Advanced Micro Devices (AMD), Qualcomm (QCOM) and Nvidia (NVDA) also retreated.

“Ugly start of the day for stocks. Tech sell off into the beginning of earnings. ASML beats but is doing a lot of business in China. Chips are clearly power in the (artificial intelligence) world order and the U.S. wants to protect its tech dominance,” Ross Gerber, co-founder of Gerber Kawasaki Wealth & Investment Management, said on X (formerly Twitter).

Meanwhile, U.S. presidential candidate Donald Trump in a Bloomberg interview said that Taiwan “should pay us for defense.” His remarks about the island nation – which is at odds with its massive Asian mainland neighbor China – negatively impacted shares of Taiwan Semiconductor Manufacturing (TSM), the world’s largest semiconductor foundry.

Conversely, Global Foundries (GFS) and Intel (INTC), which compete with TSM in the foundry market, saw their stocks climb. The latter provided a boost to the Dow (DJI) as well.

Speaking of the blue-chip index, the venerable gauge was also lifted by Johnson & Johnson (JNJ). The pharmaceutical giant delivered a quarterly top- and bottom-line beat, as strong sales of its drugs, including blockbuster medicines Stelara and Darzalex, helped offset a middling performance at its medical tech division.

Turning to Wednesday’s economic calendar, the housing starts and permits report for June came in before the opening bell, with both metrics showing a ~3% M/M rise. Soon after, U.S. industrial production for June arrived, growing at a higher pace than expected. Following the start of regular trading, the Atlanta Federal Reserve’s gauge of year-ahead business inflation expectations came in relatively unchanged in July.

In terms of monetary policy, Fed Governor Christopher Waller grabbed some attention after he said that the central bank was getting closer to cutting interest rates. Furthermore, the Fed’s latest Beige Book signaled that U.S. economic activity grew at a slight to modest pace in most districts.

Looking at the fixed-income markets, U.S. Treasury yields on Wednesday showed little reaction to a $13B 20-year bond auction that traded through. The longer-end 30-year (US30Y) and 10-year yields (US10Y) were both largely flat at 4.37% and 4.15%, respectively. The shorter-end, more rate-sensitive 2-year yield (US2Y) was up 2 basis points to 4.44%.

See live data on how Treasury yields are doing across the curve on the Seeking Alpha bond page.