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* Chipmakers, tech stocks fall as trade tensions rise
* Trade-sensitive industrials drop
* Energy stocks mirror slump in oil prices
* L Brands jumps after quarterly earnings beat
* Indexes fall: Dow 1.51%, S&P 1.32%, Nasdaq 1.52%
(Updates to open)
By Shreyashi Sanyal
May 23 (Reuters) - Wall Street's main indexes fell more than
1% on Thursday, as technology stocks were hammered by fears that
the U.S.-China trade spat could turn into a tech cold war
between the two countries.
Beijing said Washington needs to correct its "wrong actions"
for trade talks to continue after the United States blacklisted
Huawei Technology Co Ltd HWT.UL last week. Although the Trump administration temporarily eased curbs on
the Chinese telecoms gear maker, tensions again mounted on
Wednesday following reports that the United States was
considering sanctions on Chinese video surveillance firm
Hikvision.
Investors now fret that tit-for-tat tariffs and other
retaliatory actions by the world's two largest economies will
crimp global growth, and especially hit the high-growth tech
sector.
Apple Inc AAPL.O fell 2.1%, while Microsoft Corp MSFT.O
dropped 1.6%, weighing on the S&P 500 technology sector,
.SPLRCT which dropped 1.91%.
Chipmakers, which have a higher revenue exposure to China,
also declined, with the Philadelphia Semiconductor index .SOX
tumbling about 3%.
Trade-sensitive industrials .SPLRCI slipped nearly 2%,
hurt by losses in shares of bellwethers Boeing Co BA.N and
Caterpillar Inc CAT.N .
"It has moved into a broader trade war. Initially, it was
about tariffs and retaliation, now you're talking about banning
companies and it's not looking good in the near-term," said
Scott Brown, chief economist at Raymond James in St. Petersburg,
Florida.
"If you look at the U.S. economy a lot of the growth in
earnings comes from what's happening overseas. Now we see that's
not been helpful and as the domestic economy slows more than
expected, that also could have a negative impact."
Data from the eurozone added to the downbeat tone. A private
survey showed business growth accelerating at a
slower-than-expected pace this month, weighed down by a
deepening contraction in the bloc's manufacturing industry.
A report from ISH Markit showed U.S. manufacturing growth
measured its weakest pace of activity in nearly a decade in May
and new orders fell for the first time since August 2009 as the
U.S.-China trade war intensified. At 9:53 a.m. ET, the Dow Jones Industrial Average .DJI was
down 388.82 points, or 1.51%, at 25,387.79. The S&P 500 .SPX
was down 37.84 points, or 1.32%, at 2,818.43 and the Nasdaq
Composite .IXIC fell 117.75 points, or 1.52%, at 7,633.10.
Energy stocks .SPNY dived 3.16%, the most among the major
S&P sectors, pressured by a plunge in crude prices as low
refinery runs and ongoing trade tensions weighed on demand
outlook for oil. O/R
The prolonged U.S.-China trade war has rattled financial
markets, knocking the benchmark S&P 500 about 5% off its record
high hit on May 1. The index is now on track to post its worst
monthly decline of the year.
NetApp Inc's shares NTAP.O slumped 12%, the most on the
S&P 500, after the data storage equipment maker forecast
current-quarter profit and revenue below Wall Street estimates.
In a bright spot, L Brands Inc LB.N jumped 12.1% after the
retailer reported better-than-expected quarterly earnings,
helped by sales in its Bath & Body Works business. issues outnumbered advancers for a 6.10-to-1 ratio
on the NYSE and a 5.57-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and 20 new lows,
while the Nasdaq recorded eight new highs and 111 new lows.