Wall Street tech stocks fell on Tuesday after chipmaker Micron Technology warned of slowing consumer demand, raising concerns about the industry’s outlook.
Shares in the US group fell nearly 5% after it said demand for chips used in personal computers and smartphones dampened customer spending.
The warning added to bearish sentiment in the sector following disappointing results from peer Nvidia on Monday. The broader Philadelphia Semiconductor index fell more than 4%.
Investor concerns about consumer demand dragged the Nasdaq Composite down about 1.5 percent in morning trading in New York and weighed on other global equity indexes. The US S&P 500 fell 0.4%.
In Germany, Adidas and Puma closed down 3.5 and 4.6 percent respectively, while industrial giant Siemens fell 2.6 percent after disappointing results on Monday. The hit to consumer companies helped drag the country’s Dax index down 1.1% at the close, while Europe’s Stoxx 600 lost 0.7%.
The economic outlook will become clearer with the release of closely watched US consumer price index data on Wednesday, which is expected to weigh on the US Federal Reserve’s plans to tighten policy currency as it struggles with searing inflation.
Economists polled by Reuters expected headline inflation to have risen 0.2% from June to July, and that core inflation, excluding food and petrol costs, would have risen 0.5%. They expect inflation to have reached 8.7% year-on-year, slightly below the June figure.
“A higher-than-expected inflation impression will lead to another round of Fed expectations,” said Patrick Moonen, chief strategist at NN Investment Partners. “Then the balance can shift towards value stocks, such as financials. On the other hand, if it’s better than expected, [high-quality] growth stocks can continue to perform well.”
He warned that the “bear market rally” of recent weeks, which has seen the MSCI World index of global shares rise more than 10 percent since a June 19 low, could end soon. “I wouldn’t be surprised to see this market go down again in the coming weeks,” he added.
Recent U.S. data showed that inflation has continued to rise in recent months, with the Fed’s preferred inflation gauge, the core index of personal consumption expenditures, and the latest cost index report of employment, which tracks wages and benefits, also in recent weeks.
Fed Chairman Jay Powell has taken a “meeting-by-meeting” approach to rate hikes, rather than providing forward guidance. 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 U.S. Treasury note rose 0.01 percentage point to 2.8% as its price fell. The 10-year German Bund yield traded flat. The dollar lost 0.2% against a basket of six currencies.
In Asia, Hong Kong’s Hang Seng closed up 0.2%, while Japan’s Topix lost 0.7%, dragged down by a 7% drop in SoftBank shares after the conglomerate reported a record loss of $23 billion in the first quarter on Monday.
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