(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.)
* Chip stocks slump on China trade worries, tech sell-off
* J&J up after beating estimates on strong drug sales
* UnitedHealth Group jumps to record high
* Russell 2000 set to snap five-day winning streak
* Indexes: Dow up 0.55%, S&P down 1.26%, Nasdaq down 2.63%
July 17 (Reuters) -
The Nasdaq tumbled more than 2% to a two-week low on Wednesday, pulled down as megacap chip and tech stocks fell on the prospect of tighter China-focused U.S. trade curbs, while the Dow bucked the trend and jumped to a record high.
A report that the Biden Administration was considering severe trade restrictions as part of a chip clampdown against China weighed on semiconductor stocks, sending the Philadelphia SE Semiconductor index spiraling 4.9% to a two-week low, and putting the tech-heavy Nasdaq on pace for its worst day since December 2022.
AI-chip favorite Nvidia fell 6.2%, while ASML's U.S.-listing slumped 11.4%
Taiwan Semiconductor Manufacturing's U.S.-listed shares shed 6.4% after Republican presidential candidate Donald Trump said Taiwan should pay the U.S. for its defense.
However, the Dow rose to touch an intraday record high supported by Johnson & Johnson, which gained 3.3% after a second-quarter results beat.
Also lifting the blue-chip index, UnitedHealth Group jumped 4% to a record high, while Intel defied the chips rout to rise 2.1%.
Participants said the broader decline in stocks was unsurprising after a blistering rally in tech companies since the last leg of 2023, in addition to a recent spurt in small-cap stocks, as investors looked to add lagging sectors of the market to their portfolios.
"The market has had a tremendous run since the start of July... we have the July months options expiration on Friday, and we tend to weaken in the back half of July. Combine that with the rotation we've seen out of the megacap names and pressure in semiconductor stocks today (and) we were due for a dip," said Bret Kenwell, U.S. investment analyst at eToro.
The small-cap Russell 2000 index also lost 0.8% after rallying nearly 12% in the last five sessions.
All the so-called "Magnificent Seven" megacap stocks, which have primarily driven Wall Street's rally this year, slumped more than 1%. Apple, Amazon, Meta Platforms and Tesla lost between 2.6% and 4.1%.
The S&P 500 Tech index led sectoral losses with a 3.5% decline, while Energy was the top gainer, up 1.1%.
Signaling growing investor unease, Wall Street's "fear gauge" briefly hit its highest level in six weeks.
Federal Reserve officials including New York's
John Williams
and Board Governor
Christopher Waller
said the central bank was "getting closer" to the point where it could start cutting interest rates, with Richmond's Thomas Barkin saying the U.S. was at the "back end" of inflation.
At 12:11 p.m. ET, the Dow Jones Industrial Average was up 224.37 points, or 0.55%, at 41,178.85, the S&P 500 was down 71.22 points, or 1.26%, at 5,595.98, and the Nasdaq Composite was down 487.64 points, or 2.63%, at 18,021.70.
Shares of J.B. Hunt Transport Services fell 7.2% on Wednesday after the company missed revenue expectations, weighing on the Dow Jones Transportation Average index.
Spirit Airlines slumped 10.9% after cutting its second-quarter revenue outlook, citing lower-than-expected non-ticket revenue.
Declining issues outnumbered advancers by a 1.36-to-1 ratio on the NYSE, and by a 1.96-to-1 ratio on the Nasdaq.
The S&P index recorded 79 new 52-week highs and no new lows, while the Nasdaq recorded 220 new highs and 23 new lows. (Reporting by Lisa Mattackal, Ankika Biswas and Medha Singh in Bengaluru; Editing by Pooja Desai)
