Stocks fall as Huawei ban prompts sell-off in chipmakers

Chipmakers and other technology companies pulled U.S. stocks lower Monday, extending the market’s losses into another week.

The U.S. decision to ban technology sales to China’s Huawei hammered the tech sector, particularly chipmakers. About onethird 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.

Apple also skidded after an analyst warned that the iPhone maker’s growth prospects could dim as the U.S. and China continue to spar over trade.

The Huawei ban is adding more anxiety to a market worried about further escalations in the trade war between the U.S. and China. Both sides have recently gone back and forth raising additional tariffs on each other’s goods. The uncertainty has put a dent in investor confidence over how Washington and Beijing will resolve their dispute, pulling stocks lower the last two weeks.

“The news that has filtered out of the (Trump) administration is that talks have stalled,” said Quincy Krosby, chief market strategist at Prudential Financial. “Nonetheless, the market has held up fairly well given the desire by the market to see a deal consummated.”

The S&P 500 has fallen 3.6 percent so far this month, taking a bit of the shine off a stellar start to the year. The index is still up 13.3 percent year to date.

On Monday, the S&P 500 lost 19.30 points, or 0.7 percent, to 2,840.23.

The Dow Jones Industrial Average fell 84.10 points, or 0.3 percent, to 25,679.90. Apple was the biggest drag on the Dow.

The technology heavy Nasdaq composite slid 113.91 points, or 1.5 percent, to 7,702.38. The Russell 2000 index of small company stocks gave up 10.80 points, or 0.7 percent, to 1,524.96.

Major stock indexes in Europe closed broadly lower.

Bond prices fell. The yield on the 10-year Treasury rose to 2.42 percent from 2.39 percent late Friday.

Chipmakers led the way lower Monday as traders weighed the implications 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 percent of its revenue from China, slumped 6 percent. Broadcom, which gets nearly half of its revenue from China, also fell 6 percent. Intel dropped 3 percent and Xilinx slid 3.6 percent. An S&P index that measures the performance of chip and chip equipment makers fell nearly 4 percent.