Chip stocks chill Wall Street despite strong TSMC earnings

Stocks on Wall Street and in Europe were broadly weaker with tech stocks on the back foot, despite another record quarter for Taiwan Semiconductor Manufacturing Co.

Oil prices were muted as the US and Iran continued to trade strikes and the Islamic Republic asked Houthi allies in Yemen to close the Red Sea oil route if its power network is struck, while Chevron was poised to invest in two Iraqi oilfields and explore a pipeline to bypass the Strait of Hormuz and incoming UK prime minister Andy Burnham was expected to announce new drilling in the North Sea.

Earnings season continued with Abbott Laboratories, UnitedHealth Group and JB Hunt Transport Services beating expectations, while United Airlines fell short of forecasts. Netflix is due to report after the bell.

And the resources-heavy S&P/ASX 200 index is poised to start the day on the back foot with gold futures falling below US$4,000 an ounce, while Statistics New Zealand’s monthly partial inflation reading will feed into local economists’ final gauges of consumer prices.

The chips are down

Intel, Nvidia and Marvell Technology were caught in the latest cooling on Wall Street as volatile investor sentiment turned on tech stocks in the US, with the Nasdaq Composite down 1.4% in late trading. That was despite TSMC posting another quarter of record earnings.

“The semiconductor sector was once again at the centre of the selling,” Moomoo market strategy consultant Greg Boland said in a note. “Taiwan Semiconductor fell more than 3% despite delivering another outstanding quarterly result that comfortably exceeded expectations on revenue, margins and profit.”

The S&P 500 was down 0.6% and the Dow Jones Industrial Average slipped 0.4%, with Goldman Sachs, Alphabet and Caterpillar at the bottom of the blue-chip index’s leaderboard.

Earnings season continued to deliver strong results, with Abbott Laboratories climbing 10% on growth in sales of its medical devices and UnitedHealth beating expectations, while JB Hunt Transport Services advanced after reporting stronger freight rates flowing through to earnings.

United Airlines declined as its improved outlook fell short of expectations and GE Aerospace dropped 5.3% as supply issues continued to slow production and delay deliveries.

Space companies were under pressure, with SpaceX extending its decline and local favourite Rocket Lab slumping 12% to US$67.08.

Chevron advanced amid reports the oil major planned to invest in two Iraqi oilfields, and would join a consortium to investigate a pipeline to connect with Syria’s coast, bypassing the Strait of Hormuz.

Uber Technologies rallied after it agreed to buy Germany’s Delivery Hero for US$14.8 billion, expanding the group’s international food-delivery footprint.

Early access

Meanwhile, Trump Media & Technology Group nudged up after it said it planned to charge for access to a real-time feed to its highest-ranking accounts on its Truth Social platform, including US President Donald Trump.

Brent crude oil futures dipped 0.7% to US$84.40 a barrel as the US-Iran conflict entered another day. Meanwhile, incoming UK prime minister Burnham was reportedly preparing to announce new drilling for oil and gas in the North Sea and a temporary nationalisation of Thames Water.

The kiwi dollar traded at 58.43 US cents at 7am in Auckland from 58.48 cents yesterday after data showed US retail sales rose 0.2% last month, in line with expectations, with Stats NZ’s selected prices index the main local data due today.

New Zealand and Switzerland agreed to establish a trade and investment dialogue to explore a potential agreement, with officials to hold their first meetings in September.

Gold futures fell 1.6% to US$3,988/oz and Australian futures are pointing to 0.2% decline for the ASX 200 when trading opens across the Tasman.

“Local sentiment remained subdued as investors balanced renewed Middle East tensions, elevated oil prices and weaker Chinese economic data against encouraging company-specific news,” Moomoo’s Boland said.

The S&P/NZX 50 index has dropped 1.2% so far this week, with trading desks thinned out of the school holidays.

Reporting by Paul McBeth. Image from Vishnu Mohanan on Unsplash.