Wednesday, June 19, 2019
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Stocks fall to the public due to major trade war concerns, and Qualcomm leads the technology lower

Stocks retreated on Wednesday as trade fears increased as the decline in Qualcomm and retail stocks dampened market sentiment.

The Dow Jones Industrial Average fell 89 points in the Open as Home Depot and Goldman Sachs lagged behind. The S & P 500 fell 0.3%, while the technology sector slid by half a percent. The Nasdaq Composite underperformed with a minus of 0.4%.

Treasury Secretary Steven Mnuchin told CNBC Ylan Mui that a trip to Beijing to resume trade talks has not yet been scheduled. This diminished the hope for an early resolution of the trade war between the US and China.

President Donald Trump followed suit by threatening to raise tariffs on Chinese goods worth $ 200 billion earlier this month from 10% to 25%. China responded immediately, raising tariffs on US goods worth $ 60 billion up to 25 percent.

This, as well as the restrictions on Chinese telecom giant Huawei, has led China to rethink its overall economic relations with the US, according to a report by the South China Morning Post. The report said China is considering ceasing to purchase natural gas from the US. In 2017, China purchased $ 6.3 billion worth of US crude and liquefied natural gas.

President Donald Trump attends a Welcome Ceremony with China's President Xi Jinping on November 9, 2017 in Beijing, China.

Thomas Peter Pool | Getty Images

Qualcomm shares fell 9.5% after a US judge ruled that the chipmaker violated the antitrust laws by illegally suppressing cell phone chip competition. The news pulled down the VanEck Vectors Semiconductor ETF (SMH) by 1.3%.

Qualcomm's shares were under pressure throughout the month, falling 9.7% to close on Tuesday.

The US has recently blacklisted Chinese telecommunications giant Huawei, which is restricting its US operations. Some of these restrictions, however, were relaxed on Monday. The relief over Washington's easing of curbs over Huawei helped strengthen US stocks in the last session.

"This will, in our view, weaken the US Huawei ban and leverage China's dealings with the G-20," said Dan Ives, an analyst with Wedbush Securities, in an e-mail he posted the judgment related. "Qualcomm will be shocked with this FTC decision as the most important US 5G arms dealer, and Huawei has strengthened the leverage on 5G."

Retailers remained under pressure after the release of quarterly results from companies in the industry. Lowe's fell more than 8% as earnings were weaker than expected. In the meantime, Nordstrom lost 7.9% as quarterly results and revenues were below expectations.

The goal was the bright spot among the retailers. The company's stock gained more than 8% as earnings and sales exceeded analysts' expectations. Same-store sales, a key measure for retailers, also exceeded estimates.

Investors also looked forward to the publication of the US Federal Reserve's minutes. The Federal Reserve is expected to provide insights into the meeting on May 1, when policymakers left interest rates unchanged and showed little appetite to adjust soon.

Prior to the publication of the minutes, Fed President James Bullard, a voting member of the central bank's policy-making body, said the Fed may have raised interest rates too much over the past year. "Prices in the US are currently in a good place and if we are a bit restrictive, I would say so," he told Bloomberg News. "I'm worried we might have overdone it with our rate hike in December, but I was pleased that the committee has turned."

– Sam Meredith of CNBC contributed to this report.

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