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Stock Futures Turn Lower As 10-Year Treasury Yield Hits 3% Again

Stock futures for the S&P 500, Dow Jones and Nasdaq 100 turned modestly negative as the 10-year Treasury yield moved back to 3% in late trading. The benchmark yield hit that level intraday Tuesday, triggering sharp selling in the major averages. The S&P 500 index, Dow Jones and Nasdaq sold off on the stock market today, falling further below their 50-day moving averages.

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The chip sector broke a key support line for the first time in 22 months in Tuesday’s session, weighing on Apple (AAPL) and the broader market. Texas Instruments (TXN) led generally positive semiconductor news late Tuesday, lifting chip stocks such as Intel (INTC) and Nvidia (NVDA). But not all chip earnings reports were positive late.

Google-parent Alphabet (GOOGL) plunged nearly 5%, Caterpillar (CAT) 6.2% and 3M (MMM) 6.8% in earnings-related moves.

Chip Sector Woes

Meanwhile, the Philadelphia Semiconductor Index lost 0.8%, its fifth straight loss, to close below its 200-day moving average for the first time since June 2016. The iShares Philadelphia Semiconductor (SOXX) ETF also ended just below that long-term support level.


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Stock Futures

Stock futures, which had indicated slim gains, pointed to modest losses. Dow Jones futures fell 0.2%. S&P 500 futures dipped 0.2%. Nasdaq 100 futures slid 0.1%.

Texas Instruments

Texas Instruments earnings rose 39% vs. a year earlier as revenue climbed 11%, both better than expected. TI also guided higher. The stock jumped 5.6% in late trading after closing up 0.3% at 98.42.

Texas Instruments isn’t just one of the biggest chipmakers but also fairly diverse, with big exposure to the mobile and automotive markets. So TI’s results are a good indicator for chips and end markets.

Chip-gear maker MKS Instruments (MKSI) and LED-chip maker Cree (CREE) also jumped late on their results.

But big-cap chip-equipment maker Teradyne (TER) tumbled after hours on weak guidance. Teradyne warned of weak demand for equipment to test mobile devices.

That’s not the most recent chip warning directly tied to smartphone weakness. Taiwan Semiconductor (TSM), which makes a lot of chips for Intel, Nvidia and others, cited phone woes in its grim outlook last week.

Intel, Chip Plays Edge Higher

Still, the SOXX ETF rose a fraction in after-hours trading. Nvidia also rose slightly.

Intel, which reports earnings Thursday, rose 1% late. During the regular session, Intel closed up 0.7% at 51.45 after hitting 53.64 intraday, nearly retaking a 53.88 flat-base entry.

Remember that after-hours action in stock futures as well as individual stocks and ETFs doesn’t always translate into regular-session gains.

Why Chip Stocks Matter

Chip stocks are a huge share of the market, especially in the Nasdaq. Chips are in so many products, from PCs, servers and smartphones like the Apple iPhone, to also “non-tech” products such as cars and appliances. So if semis are faring poorly, it’s not a good sign for end demand in many industries. That’s a big reason why last week’s weak outlooks from contract chip giant Taiwan Semi and equipment makers Lam Research (LRCX) and ASML (ASML) have hurt the broader stock market.  Apple lost 1.4% on Tuesday after undercutting its 200-day line Monday. The iPhone maker has lost 8.6% over five sessions.

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