Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York, August 8, 2022.
Andrew Kelly | Reuters
Stocks fell on Tuesday as investors navigated a batch of disappointing company reports ahead of a key inflation reading.
The S&P 500 fell 0.6%, while the Nasdaq Composite dropped 1.5%. The Dow Jones Industrial Average was down 52 points, or 0.2%.
The declines came after memory chipmaker Micron warned that revenue may fall short of its prior guidance because of “macroeconomic factors and supply chain constraints.” The stock fell more than 5%.
It’s been a rough week for chipmakers. On Monday, weaker-than-expected revenue guidance from Nvidia weighed on the group. Nvidia was lower again on Tuesday, shedding another 4% after a 6% decline on Monday. The iShares Semiconductor ETF lost more than 4% on Tuesday after falling 1.5% on Monday.
“These are two big players that I think investors thought were in a better position to navigate through some of these recent supply chain issues. I think there’s concern that this is really going to weigh on tech,” said Ed Moya, senior market analyst at Oanda.
The S&P 500 has climbed for three straight weeks, but earnings season has featured demand warnings from executives of major companies. Investors are watching closely to determine how the Federal Reserve’s fight against inflation is rippling through the economy.
“Everything that we’re getting is [showing] that inflation is having a much harder impact on corporate America outlooks, and that’s why I think this market is going to be difficult to continue to buy equities,” Moya added.
Outside of chips, a pair of Nasdaq-listed stocks were also taking early hits. Novavax slumped 27% after slashing full-year revenue guidance because of poor demand for its Covid vaccines. Upstart declined nearly 10% after the consumer lending company reported second quarter results that missed both profit and revenue expectations.
On the economic front, investors are awaiting the latest reading of the July consumer price index, due Wednesday, to find some clarity on the path of interest rate hikes from the Fed as it works to stamp out inflation, or at least slow it down.