Wall Street remains on the slippery slope
Further losses in important technology stocks weighed down Wall Street on Thursday. The Dow Jones Index of Industrial Average closed 1.3% lower at 40,665 points. The technology-heavy Nasdaq gave up 0.7% to 17,871 points. The broad-based S&P 500 lost 0.8% to 5,544 levels.
Stocks in the semiconductor sector rebounded slightly in early trading after Taiwan Semiconductor Manufacturing Company (TSMC) presented an optimistic outlook. However, investors soon refocused on concerns about the deepening trade war between the US and China. Titles of industry giants like AMD and Micron each lost around two percent. "We had a recovery rally this morning due to TSMC, but the technology sector is overbought," observed Dennis Dick, trader at Triple D Trading.
The Russell 2000 Index of Small Cap Stocks broke its rally and slipped 1.8% lower. The stock market barometer with the stocks of companies like the online car dealer Carvana had risen by a total of about 11% in July. With around 2,224 points, it stood near the level it had last reached at the beginning of 2022. "That was a little too much and too fast for the Russell. Nothing goes up indefinitely," said Dick.
However, the upward trend in Small Cap Stocks is expected to continue in the coming weeks according to the expert. The background is the expectation of relatively low interest rates in the US soon. This has recently encouraged investors to invest in smaller companies instead of the previously booming Technology Stocks. It is expected that the economic recovery associated with the interest rate turnaround will improve the chances for less well-known companies.
DISAPPOINTING EXPANSION PLANS PRESSURE DOMINO'S
Companies outside the Tech Sector came under pressure, among them Domino's. The titles of the pizza chain slid after a disappointing financial report, down about 13%. The company reported a surprisingly strong profit in the second quarter. However, it will miss its target for international store openings in 2024. "This worries investors because international growth was originally a key component of the long-term strategy of the company," commented Jim Sanderson, analyst at Northcoast Research.
Beyond Meat stocks also took a hit. The papers of the provider of plant-based burger patties and sausages lost over ten percent. Beyond Meat is reportedly in talks with bondholders about a debt restructuring, according to the "Wall Street Journal" citing sources.
Warner Bros Discovery saw buying interest, up 2.4%. The media giant is considering spinning off its studio and streaming business from its television divisions, according to a media report. The goal of the CNN and HBO owner is to boost the stock price, reported the "Financial Times".
Investors also showed interest in CommScope. The papers of the company rose 2.3%. CommScope plans to sell its infrastructure for mobile networks and its antenna systems business for 2.1 billion dollars to reduce debt.
The ongoing trade war between the US and China posed renewed challenges for the economy, causing stock prices of technology giants like AMD and Micron to decline. Despite initial optimism from Taiwan Semiconductor Manufacturing Company's financial outlook, the Dow Jones Index, S&P 500, and Nasdaq all ended the day with significant losses.
The disappointing expansion plans from Domino's also contributed to the overall downtrend in the stock market, resulting in a 13% decrease in the pizza chain's stock prices.
