(Reuters) – A rebound in trading-sensitive chip makers sent US stocks higher Tuesday after Washington cut off a Chinese semiconductor maker from its US suppliers.
A trader works on the New York Stock Exchange (NYSE) floor in New York, USA, October 29, 2018. REUTERS / Brendan McDermid
The Ministry of Commerce suggested the restriction to Fujian Jinhua Integrated Circuit Co. Ltd. on charges that the company has stolen intellectual property from Micron Technology Inc and, on concerns of the company, could flood the market with cheap chips.
Micron rose 1.9 percent, helping the Philadelphia Semiconductor Index gain 2.63 percent after bottoming out on Monday for over a year. The broader technology sector rose 0.18 percent.
Chip gearboxes also gained ground after KLA-Tencor Corp added strong quarterly results and forecasts, up 6.6 percent, helped by the strength of the memory business.
"There are investors who wanted to own chip manufacturers, but were so scared because of the events of the past week," said Peter Kenny, senior market strategist at the Global Markets Advisory Group, New York.
"These players were careful on the sidelines, but now they see a chance to get involved in semi-finals."
Industrials gained 0.85 percent and gained momentum after President Donald Trump said China could be "heavily traded".
But he also warned that billions of dollars in new fares are ready if a deal is not possible. That was the essence of a Monday report by Bloomberg that threw Wall Street off track.
Tariffs and rising costs are some of the factors that triggered a series of disappointing predictions from major industrial companies, chip manufacturers and other companies, which worried about the slowdown in corporate growth due to fears of faltering global expansion.
Traders said that the uncertainty surrounding the midterm elections next week was also a factor in recent volatility.
"With the impact of the midterm elections on stocks so poorly defined, we can see that they increase volatility, if not nothing," Kenny said.
At 12:56 ET, the Dow Jones Industrial Average rose 151.25 points or 0.62 percent to 24,594.17, while the S & P 500 rose 15.31 points or 0.58 percent to 2,656.56. The Nasdaq Composite rose 51.82 points or 0.73 percent to 7,102.11.
On the earnings side, Coca-Cola co-shares climbed 1.8 percent after outperforming quarterly sales, while competitor PepsiCo Inc slid 0.1 percent.
But Pfizer Inc reported lower-than-expected sales for the third quarter, cutting the upper end of its full-year sales forecast as generic drug and drug price pressures in the US weighed on its older drug business.
Under Armor Inc rose 25.1 percent after exceeding the quarterly estimates and raising full-year earnings guidance due to higher overseas sales and lower spending. Nike Inc grew 2.5 percent.
Facebook Inc. rose 0.5 percent ahead of its quarterly report due after the close.
On-going issues outweighed declines by a 1.89-to-1 ratio on the NYSE and a 1.93-to-1 ratio on the Nasdaq.
The S & P index recorded 10 new 52-week highs and 20 new lows, while the Nasdaq recorded 13 new highs and 158 new lows.
Reporting by Shreyashi Sanyal in Bangalore; Arrangement by Bernard Orr and Sriraj Kalluvila