Stocks sink as tech rally fades
NEW YORK» A seven-day surge in technology stocks ended Tuesday after President Donald Trump blocked Singapore-based chipmaker Broadcom’s effort to buy Qualcomm. Trump said he opposed the $117 billion deal because it could have been detrimental to national security.
The Dow Jones industrial average climbed as much as 197 points in early trading after investors were pleased with a Labor Department report that showed inflation remained in check last month. But the gains soon faded.
Technology stocks were at record highs after a recent rally. While Qualcomm had rejected all of Broadcom’s offers, investors are now wondering if other deals might also be blocked or if companies will hesitate before making bids for overseas competitors.
“I don’t think we’ve started to price in protectionism on a broader level,” said Gina Martin Adams, chief equity strategist for Bloomberg Intelligence.
The S&P 500 index lost 17.71 points, or 0.6 percent, to 2,765.31. The Dow Jones industrial average slid 171.58 points, or 0.7 percent, to 25,007.03. The Nasdaq composite fell 77.31 points, or 1 percent, to 7,511.01, its first decline after seven straight gains. The Russell 2000 index of smaller-company stocks sank 9 points, or 0.6 percent, to 1,592.05.
Qualcomm is one of the biggest makers of processors that power smartphones and other mobile devices. The deal would have been the largest in the history of the technology industry and Broadcom’s offer came as other countries are also getting ready to build faster “5G” wireless networks.
Trump’s decision followed a recommendation from the Committee for Foreign Investment in the U.S., which said Broadcom might cut back on research and development spending.
Qualcomm slid $3.11, or 5 percent, to $59.07. Broadcom rose more than 3 percent early on but finished with a loss of $1.62 to $261.22. Intel, a competitor, added 26 cents to $51.78. The Wall Street Journal reported Friday that Intel wanted to stop the deal and might try to buy Broadcom to make that happen.