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Wall Street indexes declined on Monday amid Huawei tensions

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Wall Street indexes declined on Monday as the surging US pressure on Huawei has had a negative effect on the technology stocks.

The blue-chip index Dow Jones Industrial Average wiped out 84.10 points, or 0.33%, to 25,679.90 points. The broader benchmark S&P 500 fell by 0.63% to 2,841.51 points with the technology sector down by 1.8%. The technological index Nasdaq wiped out 1.46% of its value.

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The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 2.19% to 16.31.

The administration of President Donald Trump added Huawei to a blacklist, blocking the company’s ability to buy US technology without special permission. Meanwhile, it has become clear that many technology giants from the US, including Google, Intel, Qualcomm, and Broadcom, have distanced themselves from the Chinese technology company.

Google will no longer have businesses with Huawei, which require the transfer of hardware and software products, except for those covered by open source licenses. Google will cease providing technical support and collaboration for Android and Google services.

The next version of Huawei smartphones outside of China will lose access to popular apps and services, including the Google Play Store and the Gmail app.

The latest developments around technology giant Huawei happens in a tense trade war between Washington and Beijing. The trade talks between the US and China are stagnant as Washington tightens control over Chinese telecommunications companies. Earlier this month, the US raised customs tariffs on Chinese imports worth 200 billion USD, while China responded by imposing duties on US imports worth 60 billion USD.

The fears of intensifying the trade war had a negative impact on US indexes. Dow Jones and Nasdaq wiped more than 3% of their value since the beginning of May, while S&P 500 is down by 2.9%.

Still, the US decision to abolish duties on Canadian and Mexican steel and aluminum has brought some relief to investors. Canada’s Foreign Minister Chrystia Freeland said that Ottawa would take swift action to ratify the new North American trade treaty.

The 10-year Treasury note yield rose by 1.9 basis points to 2.416%. The benchmark yield slipped 5.9 basis points last week. The 2-year note yield added 1.8 basis points at 2.223%, marking its highest value since May 10, after a 4.7-basis-point decline last week. The 30-year bond yield added one basis point to 2.835%, following a weekly drop of 4.8 basis points Friday.

Corporate stocks performance

The chip makers have been subject to serious sell-offs. The shares of Nvidia and Advanced Micro Devices (AMD) fell by about 3% each, while Lam Research wiped out 5.4% of its market capitalization. The shares of Micron Technology fell by 4%, while those of Qualcomm declined by 6%.

The stocks of Apple fell by more than 3% after HSBC cut its price target for the technology giant. According to analysts, the lower price reflects concerns related to the ongoing trade war.

The shares in Silver Run Acquisition Corporation II and Edison Nation Inc fell to their all-time lows, wiping out 25.14% and 18.08%, respectively.

However, among the winners today were Verizon Communications, which added 1.58% and UnitedHealth Group Incorporated, which rose by 1.91%.

Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1916 to 1035 and 127 ended unchanged. On the Nasdaq Stock Exchange, 1647 fell and 991 advanced, while 89 ended unchanged.

Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1916 to 1035 and 127 ended unchanged. On the Nasdaq Stock Exchange, 1647 fell and 991 advanced, while 89 ended unchanged.

The top performers on the S&P 500 were Pacific Gas & Electric Co (+3.88%), TechnipFMC PLC (+2.87%) and Northrop Grumman Corporation (+2.57%), while on the flip side were Western Digital Corporation (-6%), Activision Blizzard Inc (-5.99%) and Qualcomm Incorporated (-5.99%).

Corporate earnings reports

The US slot machines manufacturer International Game Technology (IGT) came out with quarterly earnings of 0.12 USD per share, missing the analysts’ estimate of 0.23 USD per share. This compares to earnings of 0.15 USD per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -47.83%. A quarter ago, it was expected that this slot machine maker would post earnings of 0.35 USD per share when it actually produced earnings of 0.24 USD, delivering a surprise of -31.43%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. IGT posted revenues of 1.14 billion USD for the quarter ended March 2019, missing the estimates by 1.92%. This compares to year-ago revenues of 1.21 billion USD. The company has topped consensus revenue estimates just once over the last four quarters.