The main US indexes ended the last session of the week with declines, with the shares of chip maker Broadcom falling due to US pressure on Huawei, which led to a decline in the entire sector.
The blue-chip index Dow Jones Industrial Average fell by 0.07% to 26,089.61 points. The broader S&P 500 declined by 0.16% to 2,886.98 points, while the technology Nasdaq Composite wiped out 0.52% of its value, ending the day at a level of 7,796.66 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down by 3.41% to 15.28.
Earlier today, the media reported that retail sales in the US rose in May and data for the previous two months were revised upwards. This means that consumer spending is strong enough to limit the Federal Reserve’s lowering in the near future. Total retail sales increased by 0.5% compared with the previous month, after an increase of 0.3% in April. The April data were actually revised upwards. By comparison, economists interviewed by Bloomberg were expecting growth of 0.6%.
The investors are in anticipation of the Federal Reserve two-day meeting on monetary policy next week. The central bank is not expected to make any policy changes next week, but investors will look for clues about potential rate cuts later this year. Market expectations for a rate cut in July were at 86.3%, according to the CME Group’s FedWatch tool. Investors are also pricing in a 70.1% chance of another cut in September.
Meanwhile, amid ongoing controversy over its use of its users’ private information, Facebook has been kicked out of an index tracking companies that abide behind socially responsible practices. S&P Dow Jones Indices announced that the social network no longer will be part of the S&P 500 ESG Index. The gauge follows companies that S&P says engage in responsible environmental, social and governance practices, a growing part of the market as investors seek out more ethical ways to put their money to work. Companies grouped as ESG-compliant have total assets of 11.6 trillion USD, according to an estimate from the Forum for Sustainable and Responsible Investment.
For Facebook, the decision is part of an ongoing saga that has seen it come under fire for weak oversight of how its user data is sold to advertisers. Investors and political leaders have called for the company to break up, an insistence its founder, Mark Zuckerberg, has rejected.
On the bond markets, yields on 10-year and 30-year US government bonds fell to 2.084% and 2.589%, respectively.
Corporate stocks performance
The stocks of Broadcom declined by more than 5% after the company cut its forecast for its annual sales revenue, indicating that the trade war between China and the United States would seriously hurt the sector. Shares declined by 8.7% in after session. The revenue of the company will amount to 22.5 billion USD in the financial year 2019, compared to 24.5 billion USD expected three months ago. At the same time, the company said it expects to lose revenue of 1 billion USD per quarter for the rest of the year. About half of the company’s revenue last year was generated in China, and Huawei Technologies is one of the largest customers. As the two largest economies in the world have fallen into the escalating trade war and blacklists, Broadcom is one of many companies whose chips are also a victim.
Against this background, the cost of Micron Technology, Advanced Micro Technology, and Applied Materials fell by more than 1%.
Facebook shares rose by 2.2% after The Wall Street Journal reported the social network is set to announce a partnership with more than a dozen companies to create a cryptocurrency called Libra. Partners include Visa, Mastercard, PayPal Holdings, and Uber Technologies Inc.
Home Depot and Verizon Communications performed particularly strong during the trading session, adding 1.71% and 1.16%, respectively.
Chewy Inc shares surged 59% to 34.99 USD as they made their debut on the New York Stock Exchange. The stock was priced at 22 USD per share, above the initially targeted range of 17 USD to 19 USD, due to strong demand.
The top performers on the S&P 500 were Facebook Inc (+2.17%), Ventas Inc (+2.03%) and CF Industries Holdings Inc (+1.91%), while on the flipside were Signet Jewelers Ltd (-5.96%), F5 Networks Inc (-5.65%) and Broadcom Inc (-5.57%).