Nasdaq closes lower as chipmaker Micron’s warning renews tech bust

NEW YORK, August 9 (Reuters) – The Nasdaq closed on Tuesday after a depressing forecast from Micron Technology dragged chipmakers and tech stocks down as investors await US inflation data that could push the Fed to further tighten its efforts to curb inflation.

Wednesday’s high inflation figures after the jobs report released last week will stop the Fed from easing rate hikes any time soon and stop the market rallying from mid-June lows.

Traders see a 68.5% chance for a 75 basis point rate hike in September, the Fed’s third-largest hike in a row.

Adding to concerns about a tight labor market and runaway inflation, data released Tuesday showed unit labor costs accelerated in the second quarter, signaling that strong wage pressures will help keep inflation high. Read more

The Department of Labor said unit labor costs – the price of labor per a single unit of output – rose 10.8% after a 12.7% growth rate in the first quarter.

“Using last Friday’s job data as an indicator, we still see wage pressures mounting,” said Jimmy Chang, chief investment officer of the Rockefeller Global Family Office.

Chang remains cautious about the outlook for the market. “I don’t think there will be a set of numbers that will change the Fed’s policy course,” he said.

Jean Boivin, head of the BlackRock Investment Institute, said that inflation is currently mainly driven by supply, so the traditional central bank’s game of tightening interest rates to curb demand will not be as effective as previous cycles.

“We’re going to see central banks be surprised by inflation. They’re going to have to look hawks after that,” Boivin told the Reuters Global Markets Forum.

Dow Jones Industrial Average (.DJI) The S&P 500 fell 58.13 points, or 0.18%, to 32,774.41. (.SPX) It fell 17.59 points, or 0.42%, to 4,122.47 and the Nasdaq Composite. (.IXIC) It fell 150.53 points, or 1.19%, to 12,493.93.

Volume on US exchanges was 10.64 billion shares, compared to an average of 10.94 billion for the full session over the last 20 trading days.

Seven of the 11 main S&P 500 sectors fell, led by a 1.5% drop in consumer appreciation (.SPLRCD). Value stocks (.IVX) growth index closed flat (.IGX) It fell 0.8%.

Chang said last Friday’s employment data eroded some bullish arguments that the Fed would “return” to a neutral policy stance, followed by rate cuts early next year.

“You have some strategists and technicians who surrender saying the bottom is behind us, this is a new bull market now,” he said. “Typically in a bear market, a summer rally is not unusual.”

Mikron Technology Inc. (MU.O) It fell 3.7% after the memory chip maker lowered its current quarter revenue forecast and warned of negative free cash flow next quarter as demand for chips in PCs and smartphones slumped. Read more

Micron’s bleak forecast, a day after Nvidia Corp (NVDA.O) Warned of weakness in gaming business, lowers Philadelphia Semiconductor index (.SOX) With a drop of 4.57%, all 30 components fell, recording the largest single-day drop since June 16. The index has lost 7% in the last three days.

President Joe Biden signed a comprehensive bill to provide $52.7 billion in subsidies for US semiconductor manufacturing and research; This is a measure that provides bilateral support to combat China’s technology investment. Read more

“Totally discounted” on why chip stocks are not affected by the bill, Marketfield CEO Michael Shaoul said.

Rate-sensitive growth and technology stocks fell as U.S. Treasuries rose.

Despite a choppy recovery, S&P 500 benchmark (.SPX) It has dropped 13.5% this year after hitting a record high in early January amid rising consumer prices, hawkish central banks and geopolitical tensions.

Stronger-than-expected earnings from corporate America were positive, with 77.5% of S&P 500 companies beating their earnings forecast, according to Friday’s Refinitiv data.

Western Oil (OXY.N) Up 4.0% after Warren Buffett’s Berkshire Hathaway (BRKa.N) increased its share to 20.2 percent. The price of Occidental’s shares has more than doubled this year. Read more

US vaccine manufacturer Novavax (NVAX.O) Annual revenue fell 29.6% after cutting its forecast in half as it did not expect more sales of COVID-19 this year in the US due to global abundance of supply and soft demand. Read more

Decreasing issues outstripped issues that advanced 1.91 to 1 on the NYSE; The Nasdaq and the 2.41 to 1 ratio favored declines.

S&P 500 posted four new 52-week highs and 30 new lows; The Nasdaq Composite posted 42 new highs and 66 new lows.

reporting by Herbert Lash in New York and Bansari Mayur Kamdar in Bengaluru; Additional reporting by Aniruddha Ghosh in Bengaluru; Editing Arun Koyyur, Shounak Dasgupta and Lisa Shumaker

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