|Wall Street weighed down by Broadcom revenue warning|
14-Jun-19 16:15 ET
Dow -17.16 at 26089.61, Nasdaq -40.47 at 7796.64, S&P -4.66 at 2886.98
[BRIEFING.COM] The S&P 500 declined 0.2% on Friday, pulled lower by weakness in the semiconductor space after Broadcom (AVGO 265.93, -15.68, -5.6%) warned of a slowdown in demand. For the week, the benchmark index finished higher by 0.5%.
The Dow Jones Industrial Average (-0.1%), the Nasdaq Composite (-0.5%), and the Russell 2000 (-0.9%) finished with weekly gains of 0.4%, 0.7%, and 0.5%, respectively.
Broadcom cited U.S.-China trade uncertainty and export restrictions on Huawei Technologies for the disappointing outlook. In addition, Broadcom missed revenue estimates and lowered its FY19 revenue guidance below consensus. The Philadelphia Semiconductor Index lost 2.6% and many of its components dragged on the S&P 500 information technology sector (-0.8%).
Global growth worries lingered after China reporting the slowest growth rate for industrial production in 17 years in May, which contributed to the underperformance in the S&P 500 energy (-0.7%), materials (-0.5%), and industrials (-0.4%) sectors.
Still, investors were placated with economic data that showed the U.S. economy is still in relatively decent footing. Retail sales for May increased 0.5% (Briefing.com consensus 0.7%) after increasing an upwardly revised 0.3% (from -0.2%) in April. Industrial production increased 0.4% in May (Briefing.com consensus 0.2%) after declining 0.4% in April.
Stocks also recouped a good chunk of their losses in late afternoon action as the S&P 500 briefly climbed into positive territory. The comeback effort was led by the utilities (+1.0%), communication services (+0.4%), and real estate (+0.3%) sectors. Facebook (FB 181.33, +3.86) was a notable standout, rising 2.2% after RBC Capital Markets provided some positive analysis on Facebook's cryptocurrency plans.
U.S. Treasuries finished mixed. The 2-yr yield increased two basis points to 1.84%, and the 10-yr yield finished unchanged at 2.09%. The U.S. Dollar Index rose 0.6% to 97.57 to reclaim its 50-day moving average (97.46). WTI crude increased 0.3% to $52.54/bbl.
Reviewing Friday's economic data:
Looking ahead, investors will receive the Empire State Manufacturing Survey for June, the NAHB Housing Market Index for June, and Net Long-Term TIC Flows for April on Monday.
- Total retail sales increased 0.5% in May (Briefing.com consensus 0.7%) after increasing an upwardly revised 0.3% (from -0.2%) in April. Excluding autos, retail sales were also up 0.5% in May (Briefing.com consensus 0.4%) after increasing an upwardly revised 0.5% (from 0.1%) in April.
- The key takeaway from the report is that the May reading was combined with an upward revision to figures for April, which largely made up for the May shortfall to headline expectations.
- Industrial production increased 0.4% in May (Briefing.com consensus 0.2%) following an upwardly revised 0.4% decrease (from -0.5%) in April. Total capacity utilization increased to 78.1% (Briefing.com consensus 78.0%) from an unrevised 77.9% in April.
- The key takeaway from the report is that industrial production continues holding up better in the United States than in other major economies.
- The preliminary June reading for the University of Michigan Index of Consumer Sentiment decreased to 97.9 (Briefing.com consensus 98.1) from May's final reading of 100.0.
- The key takeaway from the report is that the headline pullback was owed to concern about tariffs on imports from China, which reduced the Index of Consumer Expectations.
- Business inventories increased 0.5% in April (Briefing.com consensus 0.4%) following an unrevised flat reading for March. Business sales decreased 0.2% after growing 1.3% in March.
- The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+5.3%) and sales growth (+2.8%) has widened, which should keep prices in check.
- Nasdaq Composite +17.5% YTD
- S&P 500 +15.2% YTD
- Russell 2000 +12.9% YTD
- Dow Jones Industrial Average +11.8% YTD