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Wall Street rally loses steam as Samsung warning hits chips


By Sruthi Shankar

(Reuters) - U.S. stocks struggled to hold on to gains on Tuesday as chip stocks took a beating from Samsung's profit warning and financials fell, denting optimism over U.S.-trade talks.

The South Korean giant surprised the market with an estimated 29 percent drop in quarterly profit, blaming weak chip demand, less than a week after made a rare sales warning.

The Philadelphia index fell 1.69 percent, weighed down by losses in Nvidia Corp, and Lam Research Corp.

"is sort of a confirmation that Apple is not a standalone situation and that we could probably end up seeing some more disappointments from the sector," said Sam Stovall, investment strategist at

Analysts now expect earnings at S&P 500 companies to grow 8.5 percent in the fourth quarter, down from the estimated 13.7 percent in October, according to Refinitiv IBES data. Earnings for S&P 500 companies overall are expected to grow 14.8 percent.

Wall Street's main indexes rose earlier on hopes of progress in U.S.-trade talks and after the countries extended the discussions to an unscheduled third day.

"is helping," said Stovall. "We had a successful retest of the low last Thursday and investors are piling back in because they think the worst is behind us."

rallied in the past two sessions on the back of a strong jobs data and after the Federal Reserve calmed worries about interest rate hikes hurting economic growth.

Trade and concerns over slowing economic growth triggered a selloff at the end of 2018, with posting its worst monthly performance in about a decade in December, driving down earnings estimate and stock valuations.

Since then, the S&P 500 has climbed more than 9 percent, with investors looking to the upcoming fourth-quarter earnings season for a clearer picture.

Adding to the woes for chip stocks, said it expects companies to face a challenging year, particularly in the first half.

rose 0.7 percent, adding to Monday's gains that helped the market power higher and the overtake to become Wall Street's most valuable company.

Shares of trade-sensitive rose 2.7 percent after the planemaker delivered a record 806 aircraft in 2018.

At 11:35 a.m. ET, the was up 83.07 points, or 0.35 percent, at 23,614.42. The S&P 500 was up 2.31 points, or 0.09 percent, at 2,552.00 and the Composite was down 2.23 points, or 0.03 percent, at 6,821.24.

The financial sector was pulled lower by losses in and Group Inc.

shares fell about 8.3 percent after S&P Global Ratings stripped the power utility of its investment-grade credit rating and kept it under review for a further downgrade.

Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and by a 1.22-to-1 ratio on the

The S&P index recorded no new 52-week highs and one new low, while the recorded 22 new highs and 12 new lows.

(Reporting by in Bengaluru; Editing by Sriraj Kalluvila)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 22:48 IST