The Dow stays at record levels, 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 markets closed unevenly. The Nasdaq Tech Index fell 2.8 percent to 17,996 counters in trading. The broad S&P 500 lost 1.4 percent to 5588 levels. The Dow Jones Index of Industrial Averages, however, gained 0.6 percent 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 dropped 12.7 percent after the report, despite strong quarterly earnings. US competitors like Nvidia, Micron, and Marvell lost up to 10.1 percent. The Philadelphia Semiconductor Index fell 6.8 percent.
This intensified the latest general downtrend 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 well-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
Statements from US presidential candidate Donald Trump about the Dollar caused uncertainty. Trump told Bloomberg that the strength of the Dollar had hindered the competitiveness of US exports. This fueled investor anxiety about a possible intervention in case of a Trump re-election. The Dollar Index slipped 0.4 percent to 103.84 points. It hadn't been this low since the end of March.
The North Sea oil grade Brent rose 1.6 percent to $85.06 per barrel (159 liters). The price of the light US sort WTI climbed 2.4 percent to $82.71 per barrel. A surprising sharp decline in US storage inventories contributed to the rise.
Under pressure was the airline Spirit. The titles of the low-cost carrier dropped almost 11 percent. The airline now expects a revenue of $1.28 billion for the second quarter, less than previously forecast. The background was a decline in additional service revenue. "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 leisure 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 percent. Swiss competitor Roche is leading the race for the development of a weight loss pill.
Despite the overall market closure incongruities, the Dow Jones Index of Industrial Averages managed to surpass its previous records, defying the downturn in the Technology sector and the Tech Index. Meanwhile, the potential for stricter stock trade restrictions between the US and China, affecting companies like ASML and impacting stock prices of other tech giants such as Nvidia, Micron, and Marvell, could further impact the stock trade landscape. Additionally, prospects of falling US interest rates encourage investors to shift investments towards smaller companies, potentially altering the stock prices in the near future.
