Technology stocks push the market lower; Dow falls 140

May 20, 2019 - 10:17 am

NEW YORK (AP) — A broad slide by technology companies pushed U.S. stocks lower in morning trading on Wall Street Monday, extending losses into another week.

The U.S. decision to ban technology sales to China's Huawei hammered the technology sector, particularly chipmakers. Investors are worried that the move could crimp sales for companies with revenue heavily tied to China. Broadcom and Qualcomm are both suppliers of Huawei's and each get at least half their revenue from China. Their stocks, along with Micron Technology and Xilinx fell sharply.

The ban is also adding more anxiety to a market worried about further escalations in the trade war between the U.S. and China. Both sides have gone back and forth raising additional tariffs on goods. The uncertainty is putting a dent in investor confidence and has pushed stocks lower for the last two weeks.

Consumer-related stocks also fell heavily, led by Amazon and a smattering of other companies, including Nike and Starbucks.

T-Mobile and Sprint were among the few companies to make gains. An expected favorable regulatory decision is going to speed up their $26.5 billion merger.

Utilities and energy were the only sectors to post gains as investors looked for less-risky holdings. Utilities typically benefit when investors are concerned about a slowdown in economic growth and want to put their money into safer holdings.

Companies are nearing the end of the latest earnings season. The results have not been as bad as Wall Street feared, with profit in the broad S&P 500 index contracting less than 1%. Home repair and supplies behemoth Home Depot will report its quarterly results Tuesday and retail giant Target will report results Wednesday.

KEEPING SCORE: The S&P 500 index fell 0.8% as of 10 a.m. The Dow Jones Industrial Average fell 139 points, or 0.6%, to 25,622. The technology heavy Nasdaq composite fell 1.6%.

GOOD CONNECTION: T-Mobile and Sprint appear closer to completing a $26.5 billion merger after the chairman of the Federal Communications Commission said he plans to recommend approval of the deal.

T-Mobile rose 6% and Sprint surged 25.6%.

The deal would position the companies to deploy a 5G network that would cover 97% of the U.S. population within three years of the closing of the merger and 99% of Americans within six years.

CHIPPED SALES PROSPECTS: Chipmakers fell broadly as the sector deals with the fallout from The U.S. ban on technology sales to Huawei.

The U.S. government says that Chinese suppliers, including Huawei and its smaller rival, ZTE Corp., pose an espionage threat because they are beholden to China's ruling Communist Party.

Qualcomm, which gets about 65% of its revenue from China, fell 5.4%. Broadcom, which gets nearly half of its revenue from China, fell 4.4%. Intel fell 1.7% and Xilinx fell 5.9%.

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