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Stocks - S&P Stumbles as Huawei Ban Sends Chip Stocks Spiraling Lower

2019-05-21 04:26    Investing

Stocks - S&P Stumbles as Huawei Ban Sends Chip Stocks Spiraling Lower Stock News

© Reuters.

U.S. stocks closed lower on Monday, led by a slump in chip stocks on reports U.S. companies are starting to cut off Huawei supplies following President Donald Trump's ban on the Chinese tech company.

The Dow Jones Industrial Average lost 0.33%, the S&P 500 fell 0.67%, while the NASDAQ Composite sank 1.46%.

Alphabet's (NASDAQ:GOOGL) Google suspended business with Huawei that requires the transfer of hardware, software and technical services, adding credence to fears that other U.S. companies will follow suit and cut ties with the Chinese tech giant, deepening the trade dispute between the U.S. and China.

Following the move from Google, Huawei will be immediately cut off from receiving Android system updates, stifling the tech giant's ambitions to rack up smartphone market share.

The fallout from the ban was seen in semiconductors as the Philadelphia Semiconductor Index slid more than xxx%, with Micron Technology (NASDAQ:MU), Skyworks Solutions (NASDAQ:NASDAQ:SWKS), Qorvo (NASDAQ:QRVO), and Qualcomm (NASDAQ:QCOM) - all of whom count Huawei as a major customer - ending the day nursing deep losses.

The downside in semis was exacerbated by reports that Intel (NASDAQ:INTC), Qualcomm and Broadcom (NASDAQ:AVGO) will not supply Huawei until further notice, Bloomberg reported.

With U.S. and China trade relations on the ropes, analysts offered up a bearish outlook on Apple (NASDAQ:AAPL), sending the iPhone maker's shares sharply lower.

HSBC downgraded its outlook on Apple, warning that if tariffs affect the tech giant's products imported into the U.S., the iPhone maker could be forced to raise prices, denting already weak demand for its pricey phones and lengthening the smartphone upgrade cycle.

Energy stocks, meanwhile, were boosted by a rise in domestic oil prices after Saudi Arabia vowed to continue with production cuts, despite numerous demands from Trump to rein in cuts.

In other news, T-Mobile (NASDAQ:TMUS) and Sprint Corp (NYSE:S) bucked the broader trend lower after Federal Communication Commission Chairman Ajit Pai backed a merger between the two companies. But the merger could still be scuppered as the Justice Department is reportedly against the merger as it could harm competition.

Top S&P 500 Gainers and Losers Today:

TechnipFMC (NYSE:FTI), Northrop Grumman (NYSE:NOC) and Darden Restaurants (NYSE:DRI) were among the top S&P 500 gainers for the session.

Keysight Technologies (NYSE:KEYS), Western Digital (NASDAQ:WDC) and Activision Blizzard (NASDAQ:ATVI) were among the worst S&P 500 performers of the session.

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