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Troubling Forecast From Broadcom May Weigh On Wall Street


A pullback by technology stocks may contribute to initial weakness on Wall Street following a troubling forecast from chipmaker Broadcom (AVGO). The tech-heavy Nasdaq futures are currently down by 49 points, while the Dow futures are showing a more modest 36-point drop.

Tech stocks may come under pressure after Broadcom reported better than expected fiscal second quarter earnings but lowered its full-year revenue guidance.

Broadcom President and CEO Hock Tan said the chip maker sees a "broad-based slowdown in the demand environment" due to continued geopolitical uncertainties and the effects of export restrictions on Chinese tech giant Huawei.

The comments from Tan are likely to reignite concerns about the impact of the U.S.-China trade dispute on the broader tech sector.

Trading may also be impacted by reaction to a report from the Commerce Department showing slightly weaker than expected retail sales growth in May but a substantial upward revision to the retail sales data for April.

The Commerce Department said retail sales climbed by 0.5 percent in May after rising by an upwardly revised 0.3 percent in April.

Economists had expected retail sales to increase by 0.6 percent compared to the 0.2 percent drop originally reported for the previous month.

Excluding a rebound in sales by motor vehicle and parts dealers, retail sales still rose by 0.5 percent in May, matching the upwardly revised increase in April.

Ex-auto sales had been expected to rise by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

The data paints a positive picture of the economy but may offset some of the recent optimism about a near-term interest rate cut by the Federal Reserve.

Shortly after the start of trading, The Federal Reserve is scheduled to release its report on industrial production in the month of May. Industrial production is expected to rise by 0.2 percent in May after falling by 0.5 percent in April.

The University of Michigan is also due to release its preliminary report on consumer sentiment in the month of June. The consumer sentiment index is expected to edge down to 98.0 in June from 100.0 in May.

Following the modest pullback seen over the two previous sessions, stocks moved back to the upside during trading on Thursday. Buying interest was somewhat subdued, although the major averages all ended the day in positive territory.

The major averages jumped going into the close of trading but remained off their highs of the session. The Dow rose 101.94 points or 0.4 percent to 26,106.77, the Nasdaq advanced 44.41 points or 0.6 percent to 7,837.13 and the S&P 500 climbed 11.80 points or 0.4 percent to 2,891.64.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.4 percent, while China's Shanghai Composite Index slumped by 1 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has slipped by 0.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index are down by 0.5 percent and 0.7 percent, respectively.

In commodities trading, crude oil futures are edging down $0.08 to $52.20 a barrel after jumping $1.14 to $52.28 a barrel on Thursday. Meanwhile, after climbing $6.90 to $1,343.70 an ounce in the previous session, gold futures are surging up $12.80 to $1,356.50 an ounce.

On the currency front, the U.S. dollar is trading at 108.36 yen versus the 108.38 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1245 compared to yesterday's $1.1276.

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