Technology stocks slump
At Davos, treasury secretary says weaker dollar is good for exporters
U.S. stocks bounced up and down and finished mostly lower Wednesday as technology companies sank. Commerce Secretary Wilbur Ross discussed a more nationalist trade stance, with uncertain effects for the market. The dollar, already at three-year lows, got even weaker.
Stocks got off to a strong start, but technology companies took heavier losses as the day wore on, led by chipmakers after Texas Instruments gave a disappointing forecast for the current quarter. Apple also fell.
The dollar sagged against other currencies after Treasury Secretary Steven Mnuchin said the currency’s decline is good for U.S. exporters, suggesting he isn’t likely to try to stop its slide. Airlines plunged after United Continental said it plans to ramp up passenger capacity.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin said.
Investors were struck by Mnuchin’s comments because for most of the past two decades, U.S. Treasury chiefs regularly stated that a “strong dollar is in the best interests of the United States.”
Mnuchin and Ross are at the World Economic Forum in Davos, Switzerland. Mnuchin’s comments sent the price of gold and silver higher, as investors often buy precious metals when they’re concerned about inflation or softness in the dollar. Weakness in the dollar usually helps companies that export a lot of goods from the U.S., but it can hurt smaller, more domestic companies by driving up the costs of imported components.
The Standard & Poor’s 500 index lost 1.59 points, or 0.1 percent, to 2,837.54. The Dow Jones industrial average rose 41.31 points, or 0.2 percent, to 26,252.12. In the morning the Dow rose as much as 181 points and later fell as much as 103 points before turning higher again. The Nasdaq composite fell 45.23 points, or 0.6 percent, to 7,415.06. The Russell 2000 index of smallercompany stocks skidded 11.10 points, or 0.7 percent, to 1,599.61.
Investors have focused on global trade issues the last few days. On Tuesday, the administration placed tariffs on imported solar power components and washing machines.
On Wednesday Ross said the U.S. is fighting back against countries that have taken advantage of trade deals in the past.
“Trade wars are fought every single day,” Ross said. “Unfortunately, every single day there are various parties trying to violate the rules, and trying to take unfair advantage of things ... the difference is that U.S. troops are now coming to the ramparts.”
Texas Instruments fell $10.19, or 8.5 percent, to $109.70 after analysts were disappointed with its revenue forecast for the current quarter. Competitor Applied Materials gave up 88 cents, or 1.5 percent, to $56.91 and Nvidia fell $3.11, or 1.3 percent, to $235.80.
United Continental plunged after it said it’s planning more aggressive growth over the next few years.
It’s aiming to increase its passenger-carrying capacity by 4 to 6 percent a year through 2020. United has done better recently at handling competition with lower-cost carriers, but investors worried that more flights will mean reduced prices and hurt its profits. The stock plunged $8.9, or 11.4 percent, to $69.05.
Benchmark U.S. crude rose $1.14, or 1.8 percent, to $65.61 a barrel in New York. Brent crude, used to price international oils, added 57 cents to $70.53 a barrel in London.