S&P 500 dips as chip stocks, utilities tumble

Reuters Sept 26 | Updated on September 26, 2018 Published on September 26, 2018

Energy stocks jump as oil prices hit 4-year high; Intel, other chipmakers hit by broker ratings cuts

The S&P 500 fell on Tuesday as chipmakers were dented by ratings downgrades and utilities declined ahead of an expected Federal Reserve interest rate hike, offsetting a boost from the energy sector.

S&P 500 financials, including interest-rate-sensitive bank stocks, dipped 0.38 per cent ahead of the expected rise in interest rates by the Fed on Wednesday. Utilities, which tend to be favoured in low-rate environments because of their solid dividend payments, slid 1.22 per cent.

The S&P 500 energy index added 0.57 per cent as Brent oil hit a four-year high, boosted by imminent US sanctions on Iranian exports, and OPEC and Russia's reluctance to raise output.

US consumer confidence unexpectedly rose in September, bringing it closer to levels last seen in 2000, the Conference Board said, underscoring strength in the labour market and the overall economy. The data pushed the S&P 500 consumer discretionary index up 0.59 per cent.

“A lot of the noise around trade and anything else around politics really hasn't suppressed consumer confidence nearly to the degree that the other factors have boosted it,” said Mike Dowdall, investment strategist for BMO Global Asset Management, in Chicago.

The Philadelphia semiconductor index dropped 1.70 per cent, weighing on the S&P 500 technology index, after brokerages Raymond James and KeyBanc cut their ratings on a number of chipmakers. Intel fell 2.13 per cent after Raymond James downgraded the stock.

Buoyed by strong economic growth and deep corporate tax cuts, the S&P 500 has gained 9 per cent so far in 2018. But five of the S&P 500 sector indexes are down year to date, including the consumer staples index, down 5.6 per cent. Consumer staples on Tuesday lost 0.73 per cent. The other six are higher, led by the technology index's 19 per cent rally.

“There are different stories for different sectors, it's a finicky little market,” said Dennis Dick, a proprietary trader at Bright Trading LLC. “If you're a money manager, you have to be very careful about what you're buying.”

The Dow Jones Industrial Average fell 0.26 per cent to end at 26,492.21 points, and the S&P 500 lost 0.13 per cent to 2,915.56. The Nasdaq Composite rose 0.18 per cent to 8,007.47. Inc provided the greatest lift to the technology-heavy index, jumping 2.08 per cent. In extended trade, Nike Inc fell 2.89 per cent after it reported quarterly results.

CenturyLink tumbled 8 per cent after Chief Financial Officer Sunit Patel left the company in a surprise move to join T-Mobile US Inc to oversee its integration with Sprint. T-Mobile rose 0.77 per cent and Sprint added 0.31 per cent.

Declining issues outnumbered advancing ones on the NYSE by a 1.20-to-1 ratio; on Nasdaq, a 1.00-to-1 ratio favoured advancers. The S&P 500 posted 31 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 65 new highs and 54 new lows. Volume on US exchanges was 6.6 billion shares, just below the 6.7 billion average over the last 20 trading days.

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Published on September 26, 2018
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