US STOCKS-Wall Street drops as Broadcom warning hits chip sector

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* Broadcom tumbles after warning of chip demand slowdown
* Tech down most among 11 major S&P sectors; Chips slide
* China's May industrial output growth cools to 17-yr low
* Data shows U.S. retail sales rise in May
* Indexes down: Dow 0.38%, S&P 0.37%, Nasdaq 0.64%

(Updates to open)
By Shreyashi Sanyal
June 14 (Reuters) - Wall Street's main indexes dropped on
Friday, as shares of chipmakers sank on a warning from sector
major Broadcom of a broad weakening in global demand and Chinese
data pointed to the worst slowdown in industrial growth in 17
years.
Shares of Broadcom Inc AVGO.O plunged 6.83% after it cut
its full-year revenue forecast by $2 billion, blaming the
U.S.-China trade conflict and export curbs on Huawei
Technologies Co Ltd HWT.UL . Shares of Apple Inc AAPL.O also slipped 1.66% and weighed
the most on the three main indexes. Broadcom is a major supplier
to the iPhone maker.
"Broadcom is definitely leading markets lower and that might
drive other chips lower as well. Some of it is also about the
U.S.-China trade war and the fight over Huawei," said Kim
Forrest, chief investment officer at Bokeh Capital Partners in
Pittsburgh.
Meanwhile, China's industrial output growth in May slowed
below expectations and showed signs of weakening demand,
sending a chill through stock market investors globally.
Losses in chip companies, who both source product and sell
heavily in China, dragged the benchmark S&P 500 index .SPX
lower, with the Philadelphia Semiconductor index .SOX tumbling
3%. Technology stocks .SPLRCI fell 1.06%, the most among the
11 major S&P sectors.
"China was to be expected because tariffs are having an
effect on them and that's starting to show up," Forrest said.
At 9:57 a.m. ET the Dow Jones Industrial Average .DJI was
down 99.94 points, or 0.38%, at 26,006.83, the S&P 500 .SPX
was down 10.68 points, or 0.37%, at 2,880.96 and the Nasdaq
Composite .IXIC was down 50.39 points, or 0.64%, at 7,786.74.
The S&P 500 index has gained 4.7% in June so far and was on
track to end the week slightly higher, on hopes the Federal
Reserve will soon cut interest rates.
A Fed meeting next week may provide the acid test of market
expectations that the U.S. central bank could cut rates as much
as three times this year, while a G20 summit at the end of the
month may yet yield more progress on a trade deal.
Data showed U.S. retail sales increased in May, although
slightly below expectations, which could ease fears the domestic
economy was slowing down sharply in the second quarter. "It's important to remember that softening economic data
does not mean recessionary economic data," Mike Loewengart,
vice-president of investment strategy at E*Trade Financial in
New York, said.
Declining issues outnumbered advancers for a 2.10-to-1 ratio
on the NYSE and a 2.17-to-1 ratio on the Nasdaq.
The S&P index recorded 20 new 52-week highs and one new low,
while the Nasdaq recorded 22 new highs and 30 new lows.