Semiconductor stocks fell
The tech-heavy NASDAQ Composite Index fell 0.37% in the early trading session on April 9 driven by declines in semiconductor stocks. Seven of NASDAQ’s top 12 decliners were semiconductor stocks. In the semiconductor space, graphics, memory, and semiconductor equipment companies saw their stocks fall.
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The iShares PHLX SOX Semiconductor (SOXX) and the VanEck Vectors Semiconductor ETF (SMH) fell 1.2% in the early trading session on April 9 after reaching their all-time high on April 8. Today’s decline could be a correction to yesterday’s peak and Credit Suisse’s semiconductor downgrade. Credit Suisse downgraded the semiconductor sector from “overweight” to “benchmark” as its high stock valuation makes it less attractive in the current market environment.
The largest decline was reported by Advanced Micro Devices (AMD), which fell 4% in the early trading session on April 9. Its rivals NVIDIA (NVDA) and Intel (INTC) also fell 1.8% and 1.4%, respectively. This decline partially offset the 8.5% increase on April 3 on news that TSMC (TSM) received strong orders from AMD for its 7-nm (nanometer) chips. AMD’s stock decline could be a correction as the stock was overbought in the first week of April.
The next big decline was from Micron Technology (MU), which fell 3.5% in the early trading session on April 9. The stock fell as Wall Street analysts continued to downgrade the stock. Rival Western Digital (WDC) stock fell 2.0%.
Analysts at Cowen & Company and Morgan Stanley downgraded Micron, as they believe that the memory market trough is a few quarters away. Thus, it may be too optimistic to say that Micron’s earnings will bottom put in the second quarter of 2019. Analyst downgrades came after Samsung (SSNLF), the world’s largest memory chipmaker, lowered its first-quarter earnings guidance due to falling memory prices.
Semiconductor equipment stocks
The fear of prolonged weakness in the memory market sent the stocks of semiconductor equipment suppliers down as memory chip suppliers reduce their capital spending to control supply. Stocks of Applied Materials (AMAT), KLAC (KLAC), and Lam Research (LRCX) fell 2.%, 2.6%, and 2.0% in the early trading session on April 9. Semiconductor stocks are very volatile ahead of first-quarter earnings as traders trade actively on risks and opportunities.
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