By Noel Randewich and Ankika Biswas
(Reuters) – U.S. stocks tumbled on Friday as chipmakers dropped on concerns about weak consumer demand, while rising Treasury yields pressured Amazon and other megacap growth companies.
Chip equipment makers Applied Materials, Lam Research and KLA Corp fell more than 4% after Reuters reported TSMC had asked its major vendors to delay deliveries.
Nvidia, Advanced Micro Devices, Broadcom and Micron Technology dropped between 2.4% and 4.3%, pulling the Philadelphia Semiconductor index down to a three-week low.
Stoking worries over chip demand from automakers, the United Auto Workers’ union launched simultaneous strikes at factories of General Motors, Ford and Chrysler parent Stellantis.
China’s industrial output grew more than expected in August, data showed, suggesting that a recent flurry of support measures may be starting to slowly stabilize a stumbling economic recovery.
Data on Thursday showed U.S. retail sales rose more than expected in August, easing worries about a recession.
Treasury yields edged higher ahead of the Federal Reserve policy meeting next week, with the central bank facing a strong U.S. economy with inflation that remains above target.
“We really continue to see that growth resilience story, and I think that’s difficult for the market simply because there’s concern about what that could mean both for rates and inflation,” said Lisa Erickson, head of public markets at U.S. Bank Wealth Management in Minneapolis.
Traders’ bets on the Fed holding rates steady in its Sept. 20 policy meeting remained at 97%, while their odds for a pause in November stood at 67%, according to the CME FedWatch Tool.
Among growth stocks sensitive to higher interest rates, Amazon dropped 2.8%, Microsoft fell 2.2% and Meta Platforms declined 3.5%.
Adobe dropped 4.8% to a more than two-week low after the Photoshop software maker disclosed a commercial paper program of up to $3 billion on Sept. 8 following its third-quarter results.
The expiry of quarterly derivatives contracts tied to stocks, index options and futures, also known as triple witching, later in the day is expected to keep markets volatile.
The S&P 500 was down 1.19% at 4,451.44 points.
The Nasdaq declined 1.62% to 13,700.53 points, while the Dow Jones Industrial Average was down 0.81% at 34,623.61 points.
All 11 S&P 500 sector indexes, led lower by information technology, down 2.09%, followed by a 1.85% loss in consumer discretionary.
SoftBank’s Arm Holdings was near unchanged after a stellar Nasdaq debut on Thursday that rekindled expectations of a turnaround in the initial public offering (IPO) market.
Arm’s strong debut prompted grocery delivery app Instacart to raise the proposed price range for its IPO to target a fully diluted valuation of up to $10 billion.
Neumora Therapeutics, backed by Amgen and Japan’s SoftBank, made a tepid debut at $16.50 per share, lower than its IPO price of $17 per share.
Declining stocks outnumbered rising ones within the S&P 500 by a 3.2-to-one ratio.
Across the U.S. stock market, declining stocks outnumbered rising ones by a 2.6-to-one ratio.
(Reporting by Ankika Biswas and Shristi Achar A in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Vinay Dwivedi and Richard Chang)
