NEW YORK (AP) – Technology companies led a broad slide in stocks Monday afternoon on Wall Street, extending the market’s losses into another week.
The U.S. decision to ban technology sales to China’s Huawei hammered the technology sector, particularly chipmakers. About one-third of Huawei’s suppliers are American chipmakers and investors are worried that the action against Huawei could crimp sales for companies with revenue heavily tied to China.
Broadcom and Qualcomm are both Huawei suppliers and each get at least half their revenue from China. Their stocks, along those of most other major chipmakers slumped.
The Huawei ban is also adding more anxiety to a market worried about further escalations in the trade war between the U.S. and China. Both sides have gone back and forth raising additional tariffs on each other’s goods. The uncertainty is putting a dent in investor confidence and has pushed stocks lower the last two weeks.
The S&P 500 has fallen 3.4% so far this month, taking a bit of the shine off a stellar start to the year. The index is still up 13.5% year to date.
Apple fell 3.5% Monday and was the biggest drag on the Dow Jones Industrial Average. Alphabet Inc., Google’s parent company, slid 2.1% after it indicated that it would have to cut some features on Huawei smartphones. Other communications stocks moved lower. Facebook dropped 1.5% and Comcast gave up 1.9%.
Consumer-focused stocks also fell. Starbucks was among the big decliners, shedding 2.4%.
American Airlines had the steepest decline among major airlines after Morgan Stanley warned that it faces higher labor costs on top of higher fuel costs. The stock was down 2.6%.
T-Mobile and Sprint gained on hopes that an expected favorable regulatory decision will speed up their $26.5 billion merger.
Banks and other financial stocks were the best performers. Capital One Financial added 1%.
Utilities also eked out gains as investors looked for less-risky holdings. Utilities typically benefit when investors are concerned about a slowdown in economic growth and want to put their money into safer holdings.
Companies are nearing the end of the latest earnings season. The results have not been as bad as Wall Street feared, with profit in the broad S&P 500 index contracting less than 1%. Home repair and supplies behemoth Home Depot will report its quarterly results Tuesday and retail giant Target will report results Wednesday.
KEEPING SCORE: The S&P 500 was down 0.6% as of 1:25 p.m. Eastern Time. The Dow Jones Industrial Average fell 75 points, or 0.3%, to 25,688. The technology heavy Nasdaq composite slid 1.3%.
Major stock indexes in Europe were broadly lower.
GOOD CONNECTION: T-Mobile and Sprint appear closer to completing a merger after the chairman of the Federal Communications Commission said he plans to recommend approval of the deal. The full commission must still vote, and the Justice Department must also clear the deal.
T-Mobile climbed 5.5% and Sprint surged 21.8%.
The deal would position the companies to deploy a 5G network that would cover 97% of the U.S. population within three years of the closing of the merger and 99% of Americans within six years.
CHIPPED SALES PROSPECTS: Chipmakers fell broadly as the sector deals with the fallout from the U.S. ban on technology sales to Huawei.
The U.S. government says that Chinese suppliers, including Huawei and its smaller rival, ZTE Corp., pose an espionage threat because they are beholden to China’s ruling Communist Party.
Qualcomm, which gets about 65% of its revenue from China, slumped 5.6%. Broadcom, which gets nearly half of its revenue from China, fell 4.1%. Intel dropped 2.6% and Xilinx slid 2.8%.
SPARKING CONCERN: Tesla fell 3.1% after an analyst at WedBush said there seems to be mixed signals on demand for the electric car maker’s Model 3, which could make it harder for the company to turn a profit in the next couple of quarters and beyond.
In the client note Monday, Daniel Ives kept his “Neutral” rating on the stock, but lowered his price target to $230 from $275.
Tesla shares are down 50 percent since September, with concerns about demand for its Model 3 in the U.S. at the forefront. The company lost $702.1 million in the first quarter, among its worst quarters in two years, as sales tumbled 31%. CEO Elon Musk predicted another loss in the second quarter but said Tesla would be profitable again by the third quarter.