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US STOCKS-Megacap tech, chip stock rout drags Nasdaq to two-week low; Dow outperforms
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US STOCKS-Megacap tech, chip stock rout drags Nasdaq to two-week low; Dow outperforms

For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a window.

Chip stocks slump on China trade worries, tech sell-off

J&J up after beating estimates on strong drug sales

UnitedHealth Group jumps to record high

Russell 2000 set to snap five-day winning streak

Indexes: Dow up 0.55%, S&P down 1.26%, Nasdaq down 2.63%

Updated at 12:11 p.m. ET/1611 GMT

By Lisa Pauline Mattackal and Ankika Biswas

- The Nasdaq tumbled more than 2% to a two-week low on Wednesday, pulled down as megacap chip and tech stocks fell on the prospect of tighter China-focused U.S. trade curbs, while the Dow bucked the trend and jumped to a record high.

A report that the Biden Administration was considering severe trade restrictions as part of a chip clampdown against China weighed on semiconductor stocks, sending the Philadelphia SE Semiconductor index .SOX spiraling 4.9% to a two-week low, and putting the tech-heavy Nasdaq on pace for its worst day since December 2022.

AI-chip favorite Nvidia NVDA.O fell 6.2%, while ASML's U.S.-listing ASML.O slumped 11.4%

Taiwan Semiconductor Manufacturing's TSM.N U.S.-listed shares shed 6.4% after Republican presidential candidate Donald Trump said Taiwan should pay the U.S. for its defense.

However, the Dow .DJI rose to touch an intraday record high supported by Johnson & Johnson JNJ.N, which gained 3.3% after a second-quarter results beat.

Also lifting the blue-chip index, UnitedHealth Group UNH.N jumped 4% to a record high, while Intel INTC.O defied the chips rout to rise 2.1%.

Participants said the broader decline in stocks was unsurprising after a blistering rally in tech companies since the last leg of 2023, in addition to a recent spurt in small-cap stocks, as investors looked to add lagging sectors of the market to their portfolios.

"The market has had a tremendous run since the start of July... we have the July months options expiration on Friday, and we tend to weaken in the back half of July. Combine that with the rotation we've seen out of the megacap and pressure in semiconductor stocks today (and) we were due for a dip," said Bret Kenwell, U.S. investment analyst at eToro.

The small-cap Russell 2000 index .RUT also lost 0.8% after rallying 12% in the last five sessions.

All the so-called "Magnificent Seven" megacap stocks, which have primarily driven Wall Street's rally this year, slumped more than 1%. Apple AAPL.O, Amazon AMZN.O, Meta Platforms META.O and Tesla TSLA.O lost between 2.6% and 4.1%.

The S&P 500 Tech index .SPLRCT led sectoral losses with a 3.5% decline, while Energy .SPNY was the top gainer, up 1.1%.

Signaling growing investor unease, Wall Street's "fear gauge" .VIX briefly hit its highest level in six weeks.

Federal Reserve officials including New York's John Williams and Board Governor Christopher Waller said the central bank was "getting closer" to the point where it could start cutting interest rates, with Richmond's Thomas Barkin saying the U.S. was at the "back end" of inflation.

At 12:11 p.m. ET, the Dow Jones Industrial Average .DJI was up 224.37 points, or 0.55%, at 41,178.85, the S&P 500 .SPX was down 71.22 points, or 1.26%, at 5,595.98, and the Nasdaq Composite .IXIC was down 487.64 points, or 2.63%, at 18,021.70.

Shares of J.B. Hunt Transport Services JBHT.O fell 7.2% on Wednesday after the company missed revenue expectations, weighing on the Dow Jones Transportation Average index .DJT.

Spirit Airlines SAVE.N slumped 10.9% after cutting its second-quarter revenue outlook, citing lower-than-expected -ticket revenue.

Declining issues outnumbered advancers by a 1.36-to-1 ratio on the NYSE, and by a 1.96-to-1 ratio on the Nasdaq.

The S&P index recorded 79 52-week highs and lows, while the Nasdaq recorded 220 highs and 23 lows.


(Reporting by Lisa Mattackal, Ankika Biswas and Medha Singh in Bengaluru; Editing by Pooja Desai)

((LisaPauline.Mattackal@thomsonreuters.com;))

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.
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