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Split Deepens Between Big Techs, Res   07/17 09:51

   Some of Wall Street's most influential stocks are dropping again on 
Wednesday, hurt by worries about worsening trade tensions with China. That's 
dragging market indexes lower, but conditions may be less discouraging 
underneath the surface, and roughly as many U.S. stocks are rising as falling.

   NEW YORK (AP) -- Some of Wall Street's most influential stocks are dropping 
again on Wednesday, hurt by worries about worsening trade tensions with China. 
That's dragging market indexes lower, but conditions may be less discouraging 
underneath the surface, and roughly as many U.S. stocks are rising as falling.

   The split left the S&P 500 sagging by 1.1% a day after it set an all-time 
high for the 38th time this year. The Nasdaq composite was down 2.3% and on 
track for its worst day since October, also weighed by losses for such market 
heavyweights as Nvidia and Broadcom.

   But the Dow Jones Industrial Average was adding 130 points, or 0.3%, to its 
record set a day earlier, as of 10:15 a.m. Eastern time. The smaller stocks in 
the Russell 2000 were also holding up better than the rest of the market, down 
just 0.2%, after roaring in recent days on increasing hopes that interest rates 
are about to get easier and the U.S. economy will avoid a recession.

   It's a continuation of a recent trend that market watchers have called 
encouraging, one where more stocks are rising rather than just a handful of 
overpowering elites.

   The market's spotlight was squarely on chip companies, which tumbled after a 
report from Bloomberg News said President Joe Biden is considering the most 
severe trade restrictions available if companies like the Netherlands' ASML and 
Japan's Tokyo Electron continue to ship advanced semiconductor technology to 
China. The U.S. government has blocked Chinese access to advanced chips and the 
equipment to make them, citing security concerns, and urged its allies to 
follow suit.

   ASML saw its stock trading in the United States drop 10.9% even though it 
reported sales for the spring that came in at the high end of its forecasted 
range. Shares of Tokyo Electron, meanwhile, dropped 7.5% in Tokyo to cull its 
gain for the year to 32.2%.

   Another major chip company, Taiwan Semiconductor Manufacturing Co., sank 
after former President Donald Trump criticized the self-governed island claimed 
by Beijing, which the U.S. is obligated by treaty to defense if it is attacked.

   "Taiwan should pay us for defense," Trump said according to a transcript of 
an interview published by Bloomberg. "Taiwan took our chip business from us, I 
mean, how stupid are we?" he said.

   TSMC's stock trading in the United States dropped 7.1%.

   Reverberations reached chip stocks around the world, including big U.S. 
players that have been some of Wall Street's biggest stars this year amid a 
frenzy around artificial-intelligence technology. Nvidia fell 6.1% after 
soaring 155.2% this year through the day before.

   Advanced Micro Devices fell 7.4%, and Broadcom dropped 5.5%.

   Big Tech stocks' movements have an outsized effect on indexes like the S&P 
500, which give more weight to companies of bigger size. That was a boon in 
recent years, when Big Tech was able to soar regardless of what the overall 
economy and interest rates were doing. That helped mask weakness underneath the 
surface as the economy struggled through worries about a potential recession 
because of high rates meant to snuff out inflation.

   Now, though, some critics call those Big Tech stocks too expensive, and 
investors are starting to pile back into unloved areas of the market. The 
economy has remained remarkably resilient so far, with the job market remaining 
solid, and investors widely expect the Federal Reserve to begin cutting 
interest rates in September because inflation has slowed.

   Johnson & Johnson, whose stock is still down slightly for the year so far, 
jumped 3.6% after topping analysts' forecasts for profit in the latest quarter. 
It was one of the largest reasons the Dow Jones Industrial Average was able to 
rise despite the tumbles for chip stocks.

   U.S. Bancorp, which has also lagged the rest of the market this year, 
rallied 4% after topping analysts' forecasts for profit and revenue.

   On the losing side of Wall Street was Five Below, a retailer targeting teens 
and tweens with products priced at $5 or below. It tumbled 15.3% after its CEO, 
Joel Anderson, stepped down from his job and from the board "to pursue other 
interests." It named company co-founder Thomas Vellios as executive chairman on 
an interim basis. It also gave a profit forecast for the second quarter that 
fell short of analysts' expectations.

   Spirit Airlines lost 7.1% after the discount carrier cut its forecast for 
revenue in the second quarter. It said it's making fewer dollars from fees 
outside of tickets than expected.

   J.B. Hunt Transport Services fell 4.7% after it reported weaker profit and 
revenue for the latest quarter than analysts expected. The freight company was 
hurt by higher insurance and claims costs, among other things.

   In the bond market, the 10-year Treasury yield ticked down to 4.15% from 
4.16% late Tuesday.

   In stock markets abroad, London's FTSE 100 was 0.4% higher after data showed 
the inflation rate remained steady at the Bank of England's 2% target in June.

   Indexes were mixed elsewhere across Europe and Asia. Hong Kong's Hang Seng 
gained 0.1%, while stocks sank 0.5% in Shanghai as traders await the outcome of 
a top level policy-setting meeting of the ruling Communist Party, which wraps 
up on Thursday. The closed-door gathering in Beijing is expected to endorse 
leader Xi Jinping's vision for investing heavily in strengthening China's 
self-sufficiency in advanced technologies.

 
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