Chip Stocks Rally as Market Plunges
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No fewer than five chip companies issued earnings warnings between the time the stock market closed on Monday and reopened on Tuesday, yet all five and the rest of the sector ended the day sharply higher despite a steep plunge in the rest of the market.
Texas Instruments (NYSE: TXN), Broadcom (NASDAQ: BRCM), National Semi (NYSE: NSM) and Altera (NASDAQ: ALTR) warned after the close on Monday, and Novellus (NASDAQ: NVLS) followed this morning with a warning and a layoff announcement.
Yet shares of all five gained 3.7% or more, and the Philadelphia Semiconductor Index (PHI: SOX) ended the day nearly 5% higher.
With some of the revised guidance so far below estimates that you have to wonder what analysts were thinking, perhaps investors were thinking that the news can only get better.
But the rest of the market didn't fare nearly as well, with the Dow and S&P 500 off by more than 2% on a warning from FedEx (NYSE: FDX) that reminded investors just how weak the economy is. Yields on one- and three-month Treasury bills hit zero evidence of just how panicked some investors are that they simply want their money back.
Sony (NYSE: SNE) gained 2% on plans to cut 8,000 jobs and close as many as six factories.
The Nasdaq fell 24 to 1547, the S&P lost 21 to 888, and the Dow fell 242 to 8691. Volume fell to 6.4 billion shares on the NYSE, and 2.33 billion on the Nasdaq. Decliners led by a 25-12 margin on the NYSE, and 19-9 on the Nasdaq. Downside volume was 73% on the NYSE, and 65% on the Nasdaq. New highs-new lows were 14-89 on the NYSE, and 6-94 on the Nasdaq.