Technology stocks push the market lower, extending losses
NEW YORK (AP) — A broad slide by technology companies pushed U.S. stocks lower in late 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. About one-third of Huawei's suppliers are American chipmakers and investors are worried that the action against Huawei could crimp sales for companies with revenue heavily tied to China.
Broadcom and Qualcomm are both Huawei suppliers and each get at least half their revenue from China. Their stocks, along those of most other major chipmakers are showing declines.
The Huawei 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 each other's goods. The uncertainty is putting a dent in investor confidence and has pushed stocks lower for the last two weeks.
Apple fell 3.3% and it was the biggest drag on the Dow Jones Industrial Average. Alphabet Inc., Google's parent company, fell 2% after it indicated that it would have to cut some features on Huawei smartphones.
Consumer-focused stocks also fell, led by Amazon. Nike fell 1.8% and Starbucks fell 2.3%.
American Airlines had the sharpest drop among major airlines after Morgan Stanley warned that it faces higher labor costs on top of higher fuel costs. The stock shed 3%.
T-Mobile and Sprint gained on hopes that an expected favorable regulatory decision will speed up their $26.5 billion merger.
Banks and financial stocks were the best performers, led by JPMorgan Chase, PNC Financial and MetLife.
Utilities also posted solid 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 0.5% as of 11:30 a.m. The Dow Jones Industrial Average fell 80 points, or 0.3%, to 25,683. The technology heavy Nasdaq composite fell 1.2%.
GOOD CONNECTION: T-Mobile and Sprint appear closer to completing a merger after the chairman of the Federal Communications Commission said he plans to recommend approval of the deal. The full commission must still vote, and the Justice Department must also clear the deal.
T-Mobile rose 5.2% and Sprint surged 23.5%.
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%. Broadcom, which gets nearly half of its revenue from China, fell 4.4%. Intel fell 1.6% and Xilinx fell 4.8%.