Wall Street technology shares fell on Tuesday after chipmaker Micron Technology warned of slowing consumer demand, raising concerns about the industry’s outlook.
Shares of the US corporation fell nearly 5% after it said demand for chips used in personal computers and smartphones was waning as customers curbed spending.
The warning added to bearish sentiment in the sector following disappointing results for peer-to-peer Nvidia on Monday. The broader Philadelphia Semiconductor index fell more than 4%.
Investors’ concerns about consumer demand dragged the Nasdaq Composite down about 1.1% in morning New York trading and weighed on other global stock indexes.
The US S&P 500 index fell 0.3%, while Europe’s Stoxx 600 fell 0.6%.
Germany’s Dax index lost 0.9%, while industrial giant Siemens fell 2.2% following Monday’s disappointing results.
The economic outlook will become clearer with the release of closely watched U.S. consumer price index data on Wednesday, which is expected to affect the U.S. monetary policy tightening plan. The US Federal Reserve in the context of terrible inflation.
Economists polled by Reuters expect key inflation to rise 0.2% from June to July, with core inflation – minus the cost of food and petrol – expected to rise 0.5 %. They expect inflation to hit 8.7% year-on-year, slightly below June’s figure.
After a strong start to 2022 for energy and commodities stocks and a sharp decline for growth companies, shares of Big Tech companies have rebounded in recent weeks. The tech-heavy Nasdaq Composite is up nearly 15% so far this quarter.
“Higher-than-expected inflation should lead to another round of Fed expectations,” said Patrick Moonen, chief strategist at NN Investment Partners. “Then the balance can shift to value stocks, like financials. On the other hand, if it’s better than expected, [high-quality] Growth stocks can continue to do well. ”
He warned that the “bear market rally” of recent weeks, which has seen the MSCI World index of global equities rise more than 10% since the June 19 low, could soon be end. “I wouldn’t be surprised to see this market go down again in the next few weeks,” he added.
Recent US data suggest inflation has continued to rise in recent months, with the Fed’s preferred inflation gauge, core personal consumption spending and employment cost index reports latest. , which tracks wages and benefits, has also increased in recent weeks.
Fed Chairman Jay Powell has adopted a “meet by meeting” approach to raising interest rates, rather than giving advance guidance. Markets are pricing in the possibility of a 0.75 percentage point increase at the central bank’s next policy meeting in September.
In the government bond market, the yield on the 10-year US Treasury note added 0.04 percentage points to 2.8% as its price fell lower. Yields on the 10-year German bond rose 0.05 percentage points to 0.95 percent. The dollar lost 0.4% against a basket of six currencies.
In Asia, Hong Kong’s Hang Seng index closed down 0.2 per cent, while Japan’s Topix lost 0.7 per cent, trailing a 7% drop for SoftBank shares after the group reported record loss of 23 billion dollars on Monday for the first quarter.
