The Dow remains on record course, tech values fluctuate
For the Dow, it's continuing to climb higher, but the flight of the Nasdaq is coming to a sudden end. It's primarily the papers of recently highly sought-after semiconductor companies that are pulling down the Tech Index.
After a decline in the Technology sector, US exchanges closed unevenly. The Nasdaq Tech Index dropped 2.8% to 17,996 counters in trading. The broad S&P 500 lost 1.4% to 5588 levels. The Dow Jones Industrial Average of Standard & Poor's gained 0.6% to 41,198 points.
From depots, shares of chipmakers flew off. According to Bloomberg, the US is reportedly considering imposing the toughest trade restrictions on China if companies like ASML continue to grant China access to advanced semiconductor technology. US-listed titles of the Dutch chipmaker fell 12.7% after the report, despite strong quarterly earnings. US competitors like Nvidia, Micron, and Marvell lost up to 10.1%. The Philadelphia Semiconductor Index dropped 6.8%.
This intensified the recent downward trend in Technology stocks. Investors are currently encouraged by the expectation of relatively soon falling interest rates in the US to invest in smaller companies instead of the previously booming Technology stocks. It is expected that the economic recovery associated with a yield curve inversion will improve the chances for less known companies. "Whether Big Tech can maintain its leadership position depends on the balance sheets," said Adam Sarhan, founder and CEO of 50 Park Investments.
Dollar under pressure
Uncertainty was caused by statements from US presidential candidate Donald Trump about the Dollar. Trump told Bloomberg that the strength of the Dollar has hindered the competitiveness of US exports. This fueled investor anxiety about a potential intervention in case of a Trump re-election. The Dollar Index fell 0.4% to 103.84 points. It hadn't been this low since the end of March.
The North Sea oil grade Brent rose 1.6% to $85.06 per barrel (159 liters). The price of the light US sort WTI climbed 2.4% to $82.71 per barrel. The surprising drop in US storage inventories contributed to the rise.
Under pressure was the airline Spirit. The titles of the budget airline dropped almost 11%. Spirit now expects a revenue of $1.28 billion for the second quarter, less than previously anticipated. The background was a decline in revenue from additional services. "It's no surprise if you think about the latest bad news Delta and American Airlines have reported," wrote the experts at Bank of America. Many providers of cheap vacation flights are currently forced to lower prices to reduce excess capacity. Experts believe that airlines have expanded their offerings too much to profit from the recent increase in travel demand.
Investors also sold off Eli Lilly. The shares of the pharmaceutical company fell 3.8%. Swiss competitor Roche is leading the race in the development of a weight loss pill.
The ongoing Dow Jones Industrial Average's upward trajectory can be attributed to the overall strength of the US economy, despite the recent challenges in the Technology sector. Thiscontrasts with the sudden drop in stock trade of the Nasdaq, particularly in semiconductor companies.
The proposed tough trade restrictions on China, if implemented, could significantly impact the stock prices of companies like ASML, Nvidia, Micron, and Marvell, which are heavily reliant on semiconductor technology.
