U.S. and Europe Market Indexes Fall, Micron Tech Warning Weighs On Tech Stocks

Barry Adams
09 Aug, 2022
New York City

Stocks on Wall Street fell and the Nasdaq index declined for the third day in a row. 

Investors are increasingly factoring a larger rate hike of at least 75 basis points at the Fed Reserve's next policy meeting in September. 

The Consumer Price Index data for July are scheduled to be released on August 10. 

The inflation index increased 9.1% in June on an annual basis and 1.3% from the previous month on the sustained increase in food and energy prices. 

However, investors are hoping for the inflation to cool down following the 28% decline in crude prices from the peak in March. 

The S&P 500 index declined 0.4% to 4,122.71 and the Nasdaq Composite index dropped 1.2% to 12,493.93. 

Futures of crude oil declined 24 cents to $91.50 and natural gas rose 25 cents to $7.81 a thermal unit. 

The yield on 10-year U.S. Treasury notes rose 2 ticks to 2.78% and on 2-year notes increased to 3.27% ahead of the inflation report Wednesday. 

Chip sector stocks led the decliners after Nvidia missed its revenue outlook on Monday and Sony also guided weakening sale of its game console. 

Today, Micron Technology, Inc warned that the revenues may fall below its previous estimates

Marvell Technology fell 8.5%, Lam Research dropped 10%, Intel Corporation decreased 2.5%, and AMD fell 5.5%. 

Micron said it plans to invest $40 billion in memory chi production facilities in several phases through the end of the decade,

The announcement, made ahead of Micron executives joining President Joe Biden at the White House for the signing of the CHIPS and Science Act.  

Separately, the chipmaker said revenues may fall short of its previous estimates, either near the low end or below the previous estimate-range, blaming the macroeconomic factors and supply chain issues. 

Micron Tech declined 5.5% to $58.23 after Raymond James lowered its price target to $65 from $72. 

Signet Jewelers Ltd dropped 11.7% to $59.75 after the jewelry chain lowered its full-year revenues outlook to between $6.7 billion and $7.6 billion and $7.7 billion from the previous range between $8.03 billion and $8.25 billion. 

The company cited "heightened pressure on consumers' discretionary spending and increased macroeconomic headwinds."

Signet also announced the acquisition of Blue Nile for $360 million in cash. 

The online retailer of engagement rings and fine jewelry delivered revenues of more than $500 million 2021. 

Nielsen Holdings surged 21.2% to $27.52 after the company postponed its meeting with the U.K.-based hedge fund WindAcre, the largest shareholder with a 27% stake. 

Nielsen  today postponed the court meeting and the special meeting of its shareholders to finalize a preliminary agreement with the hedge fund to join a consortium of private equity investors and receive $28 a share a share, the same price to be paid to all other shareholders for its remaining shares. 

Sweetgreen Inc fell 23% in $13.0 in after-hours trading after the salad restaurant chain said it will layoff 5% of its support center staff and plans to downsize to a smaller office to cut operating expenses. 

The restaurant chain also lowered its 2022 revenues between $480 million and $500 million from the previous estimate between $515 million and $535 million. 

European Markets Ease On Rising Tensions with Russia 

European markets eased amid rising geopolitical tensions and investors await the U.S. inflation report Wednesday. 

The radioactive catastrophe worries in Europe rose after the Russia-controlled nuclear power plant in Ukraine was shelled on Friday and Saturday. 

Russia and Ukraine have traded accusations over who attacked the largest nuclear power plant in Europe located at Zaporizhzhia, Ukraine. 

The DAX index decreased 1.1% to 13,534.91, the CAC-40 index fell 0.5% t0 6,490.0, and the FTSE 100 index rose 0.08% to 7,488.16. 

Taiwan's foreign minister accused China of intensifying cyberattacks on the island nations and added that the mainland is using the recent military exercises in the preparation of the invasion. 

Retail sales in the U.K. rose unexpectedly after the latest heatwave lifted the demand for summer clothing and electric fans.  

Comparable retail sales in July rose 1.6% after falling 1.3% in June, the report prepared by the British Retail Consortium and advisory firm KPMG showed Tuesday. 

Resource stocks led the gainers in the region after crude oil prices inch higher. 

Brent crude edged up $1.40 to $98.21 a barrel and futures of natural gas as high as 192.0 euros a MWh. 

Dufry AG rose 4.5% to 40.35 Swiss francs after the duty-free shops operator reported strong first-half 2022 sales rose 146% to 2.9 billion Swiss francs. 

Net income in the period swung to 12.1 million Swiss francs or 76.3 million on core basis from a loss of 253.9 million Swiss francs in the year ago period. 

The company also won an extension of contract for three more years to 2029 for its largest shop at Heathrow airport. 

Duftry also won new concessions for airport locations in Helsinki, Finland, Sofa, Bulgaria, Recife Brazil, Bali, Indonesia and Santa Lucia, Mexico.  

Continental AG declined 6.4% to $64.98 euros after the automotive tire maker swung to a loss in the latest results. 

Revenues in the second quarter increased 13.0% to 9.4 billion euros but swung to a loss of 25.1 million euros from a profit of 545 million euros. 

The company reiterated its full-year outlook despite the challenging first half and persistent supply chain disruptions. 

Wacker Neuson SE declined 4.2% to 18.61 euros after the construction equipment maker reported first-half revenues increased 15.5% to 1.07 billion euros. 

Net income in the period declined 5.6% to 66.1 million euros compared to 70.1 million euros a year ago. 

The company reiterated its full-year revenues between 1.9 billion and 2.1 billion euros and narrowed its operating earnings margin between 9.0% and 10.0%. 

 

Asian Markets Diverge, Korea and Australia Extend Rallies 

In Asia, markets in Japan closed lower on earnings weakness but indexes in China, South Korea and Australia advanced. 

The Nikkei 225 index fell 0.9% to 27,999.96 after rallying for four days in a row and tech stocks led the decliners. 

SoftBank Group dropped 7% or 400 yen to 5,295.0 yen after the company's venture arm reported a huge loss of $23.4 billion and the company said it plans to cut jobs.  

The Shanghai Composite index rose 0.32% to 3,247.43. Hong Kong's Hang Seng index finished down 0.21% to 20,003.44. 

Japan Steel Works Ltd fell 9% to 2,861.0 yen and Tokyo Electron fell 8.5% to 45,600 yen after the release of quarterly results. 

Sony Group fell 2.5% to 11,435 yen after the tech conglomerate warned that the weakness in its gaming unit will negatively impact its quarterly results. 

Benchmark indexes in Korea advanced for the fifth day in a row and reached a two-month high despite the inflation and rate hike worries. 

The Kospi average increased 0.42% to 2,503.46, nearly a two-month high since June 13. 

Australian markets advanced for the third day in a row and two separate reports showed diverging trends in business and consumer sentiments. 

The Westpac-Melbourne Institute Index of Consumer Sentiment declined 3.0 percent to 81.2 in August from 83.8 in July, the ninth monthly decline totaling 22.9% in a row after reaching a high in November 2021. 

The business confidence index rose to +7 in July from +2 in June after the capacity utilization rose to 86.7% from 84.9% in the period, according to the survey data released by NAB  

The ASX 200 increased 0.13% to 7,029.80 and the All Ordinaries index closed 0.26% higher to 7,278.60.

Markets in India were closed.