S&P 500 Falls 1% as Global Chipmakers Get Hit: Markets Wrap

(Bloomberg) — Stocks fell from all-time highs as concern over tougher US restrictions on global chip sales to China spurred a rout in the industry that has powered the bull market.

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The $24 billion VanEck Semiconductor exchange-traded fund lost 4%. Nvidia Corp., Advanced Micro Devices Inc. and Broadcom Inc. tumbled. ASML Holding NV sank 8%, even after the Dutch company reported strong orders in the second quarter. Tokyo Electron Ltd. led a slide in Japan’s Nikkei 225 Stock Average.

The Biden administration has told allies that it’s considering using the most severe trade restrictions available if companies such as Tokyo Electron and ASML continue giving China access to advanced semiconductor technology. The US is also weighing additional sanctions on specific Chinese chip companies linked to Huawei Technologies Co.

Still, the move in stocks represents a small pullback after a stellar run of gains, fueled by soft inflation data and optimism that the Federal Reserve will cut interest rates. Fed Governor Christopher Waller said the economy is getting closer to a point where the central bank can reduce borrowing costs but indicated he’d like to see a “bit more evidence” inflation is on a sustained downward path.

The S&P 500 fell 1%, while the Nasdaq 100 dropped 1.7%. The Russell 2000 slid 0.9%. The yield on 10-year Treasuries advanced three basis points to 4.18%.

Corporate Highlights:

Tesla Inc. forming an autonomous taxi platform will be the catalyst for a roughly 10-fold increase in its share price, Ark Investment Management LLC’s Cathie Wood said, echoing years of bullish predictions about a business the carmaker has yet to stand up.
ASML Holding NV fell as the prospect of more severe US restrictions on its business in China offset growth in the Dutch firm’s order intake last quarter.
Amazon.com Inc.’s marketing portal for merchants crashed Tuesday night, according to multiple Amazon sellers and consultants, fouling up one of the online retailer’s biggest sales of the year.
Johnson & Johnson’s second-quarter profit beat Wall Street projections on strong pharmaceutical sales while the company cut its full-year forecast to account for a spate of recent acquisitions.
Roche Holding AG’s experimental weight loss pill showed meaningful weight reduction in an early stage study among obesity patients, setting up the Swiss drugmaker as a challenger in the field.
Elevance Health Inc. reported second-quarter results that exceeded Wall Street’s expectations as higher premiums covered medical costs.
Spirit Airlines Inc. said second-quarter revenue will be lower than expected and that operating losses will be worse due to competitive pressure on baggage fees and other non-ticket charges.
Private equity firms Advent International and PAI Partners are among suitors that submitted first-round offers for French drugmaker Sanofi SA’s consumer health division, according to people familiar with the matter.
Nomura Holdings Inc. is reshuffling its Asia investment-banking team and cutting jobs in an effort to reduce costs amid a deals slump in China and Hong Kong.

Key events this week:

ECB rate decision, Thursday
US initial jobless claims, Philadelphia Fed manufacturing, Conference Board LEI, Thursday
Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak, Thursday
Fed’s John Williams, Raphael Bostic speak, Friday

Some of the main moves in markets:

Stocks