Nasdaq drops for third straight day as chip stocks weigh on market
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, August 8, 2022.
andrew kelly | Reuters
Shares fell on Tuesday as investors navigated a series of disappointing corporate reports ahead of a key inflation reading.
The S&P 500 fell 0.7%, while the Nasdaq Composite fell nearly 1.5%. The Dow Jones Industrial Average fell 125 points, or 0.4%.
The declines came after memory chip maker Micron warned that revenue could be lower than its earlier forecast due to “macroeconomic factors and supply chain constraints”. The stock fell more than 5%.
It’s been a tough week for chipmakers. Nvidia’s weaker-than-expected revenue forecast weighed on the group on Monday, and those stocks extended their losses on Tuesday.
“I think those are two big players who investors felt were better positioned to navigate some of these recent supply chain issues. said Ed Moya, senior market analyst at Oanda.
The S&P 500 has climbed for three straight weeks, but the earnings season has been marred by demand warnings from big business executives. Investors are watching closely to determine how the Federal Reserve’s fight against inflation affects the economy.
“All we get is [showing] that inflation has a much harder impact on the outlook for American companies, and that’s why I think this market is going to have a hard time continuing to buy stocks,” Moya added.
Outside of the chips, a pair of Nasdaq-listed stocks was also hit early. Novavax fell 27% after cutting its full-year revenue forecast due to weak demand for its Covid vaccines. Upstart fell nearly 10% after the consumer loan company reported second-quarter results that missed both profit and revenue expectations.
Investors await the latest July consumer price index reading, due on Wednesday. The report is expected to show a slight slowdown in inflation, thanks in part to lower oil prices, which could inform the market about the Federal Reserve’s next steps.