Stocks end in negative territory as Huawei halts fuel further China concerns
Stocks have started the week lower as the fallout from the Commerce Department's announcement Wednesday evening regarding China Huawei is starting to sink in. While the U.S. has not yet fully blocked American chip and software makers from selling to Huawei, a number of U.S. tech companies are readying for that eventuality and it may be very difficult for the two superpowers to reach a trade compromise in such a scenario. Given the potential ramifications of the Huawei front in the ongoing trade fight, it should be no surprise that the tech-heavy Nasdaq was by far the worst performer among the major averages.
ECONOMIC EVENTS: In the U.S., the Chicago Fed's National Activity index fell to -0.45 in April after bouncing to 0.5 in March.
TOP NEWS: Alphabet's Google (GOOG) has suspended business with Huawei that requires the transfer of hardware and software products except those covered by open source licenses, meaning the Chinese device maker will immediately lose access to updates to the Android operating system and the next version of its smartphones outside of China will also lose access to popular Google applications and services, according to Reuters. Chipmakers including Intel (INTC), Qualcomm (QCOM), Xilinx (XLNX), and Broadcom (AVGO) also have told employees they will not supply Huawei until further notice, Bloomberg reported, citing people familiar with the matter.
In M&A news, Federal Communications Commission Chairman Ajit Pai announced that he believes the merger of Sprint (S) and T-Mobile (TMUS) "is in the public interest" and he intends to recommend that the FCC approve it. Bloomberg later reported, however, that the Justice Department is leaning against approving the deal, as the remedies proposed by the companies do not go far enough to resolve antitrust concerns. At the close, Sprint shares were up 18.9% while T-Mobile shares gained 3.9%, well off their highs from early in the day.
Ford Motor (F) has begun notifying employees about job cuts and by the end of August the automaker expects to eliminate 7,000 salaried positions globally, or 10% of its worldwide salaried workforce, as part of its restructuring efforts, according to various media reports citing communications to impacted employees.
Meanwhile, Facebook (FB) shares were 1.4% lower after TechCrunch reported that security researcher Anurag Sen discovered a database hosted by Amazon Web Services that was left exposed and without a password that contained the contact information of millions of Instagram celebrities.
MAJOR MOVERS: Among the noteworthy gainers was Qiagen (QGEN), which rose 2.4% after it gained 510k clearance from the FDA for QIAstat-Dx in the U.S. Also higher was The Medicines Co. (MDCO), which gained 3.8% after announcing interim results from the ongoing ORION-3 open-label extension study, which showed that twice-a-year dosing with inclisiran sodium 300 mg resulted in consistent lowering of low density lipoprotein cholesterol by more than 50% with overall follow-up of up to three years.
Among the noteworthy losers was Dish (DISH), which slid 5.9% after it agreed to acquire EchoStar's (SATS) BSS Business in an all-stock transaction valued at $800M. Also lower was Pinduoduo (PDD), which fell 8.5% after reporting quarterly results.
INDEXES: The Dow fell 84.10, or 0.33%, to 25,679.90, the Nasdaq lost 113.91, or 1.46%, to 7,702.38, and the S&P 500 declined 19.30, or 0.67%, to 2,840.23.