US tech stocks fell on slowing demand for semiconductors

Technology stocks on Wall Street fell on Tuesday after chipmaker Micron Technology warned of slowing consumer demand, raising concerns about the sector’s outlook.

Shares of the US group fell nearly 5% after it said demand was falling for chips used in personal computers and smartphones as customers curb spending.

The warning added to bearish sentiment in the sector after its counterpart Nvidia’s disappointing results on Monday. The broader Philadelphia Semiconductor index fell 5.3%.

Investor concerns over consumer demand dragged the Nasdaq Composite down about 1.4% in midday trading in New York and weighed on other global equity indices. The US benchmark S&P 500 fell 0.7%.

In Germany, Adidas and Puma fell 3.4 and 4.6% respectively, while industrial giant Siemens fell 2.6% after disappointing results on Monday. The hit to consumer companies helped push the country’s Dax index down 1.1% at the close, while Europe’s Stoxx 600 lost 0.7%.

The economic outlook will become brighter with Wednesday’s release of the closely watched U.S. Consumer Price Index, which is expected to influence the U.S. Federal Reserve’s plans for monetary policy tightening as it faces searing inflation. .

Economists polled by Reuters expect headline inflation to have risen 0.2% from June to July, core inflation – not including food and energy costs – is expected to have risen 0.5% . They expect inflation to have reached 8.7% on an annual basis, slightly below the June figure.

“A higher-than-expected inflation print will lead to a new round of hawkish expectations from the Fed,” said Patrick Moonen, senior strategist at NN Investment Partners. “Then the balance could shift to value stocks, like financials. On the other hand, if it’s better than expected, [high-quality] growth stocks can continue to perform well.

Recent data from the United States showed that inflation has continued to rise in recent months, the Fed’s favorite inflation indicator, the core personal consumption expenditure index and the latest report on the employment cost index, which tracks wages and benefits, has also risen in recent weeks.

Fed Chairman Jay Powell has taken a meeting-by-meeting approach to rate hikes, rather than providing advice ahead of time. Markets are pricing in the possibility of a 0.75 percentage point hike at the central bank’s next policy meeting in September.

In government bond markets, the yield on the 10-year US Treasury added 0.04 percentage point to 2.8% as its price fell. The German 10-year Bund yield traded flat. The dollar lost 0.3% against a basket of six currencies.

In Asia, Hong Kong’s Hang Seng index closed down 0.2%, while Japan’s Topix lost 0.7%, led by a 7% drop in SoftBank shares after the conglomerate announced on Monday a record loss of $23 billion for the first quarter.

U.S. inflation data released Wednesday could provide additional clues about the economic outlook and consumer demand, as well as how aggressively the Fed will raise interest rates to fight inflation.

“The next 30 hours will be the calm before the storm, or perhaps herald the true start of summer’s scorching days,” Deutsche Bank strategist Jim Reid wrote Tuesday morning.

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