Daily Stock Market Update — Tuesday, May 21
Stocks closed higher on Wall Street Tuesday as technology companies led solid gains across the market and more in Tuesday’s Stock Market Update.
Chipmakers rallied after the U.S. government issued a 90-day grace period on its order to restrict U.S. firms from selling to Chinese telecom gear maker Huawei. Micron Technology rose 2.9%.
About one-third of Huawei’s suppliers are American chipmakers and the move would crimp sales for companies including Qualcomm and Broadcom. Both companies posted gains Tuesday, along with other chipmakers.
Health care, financial and industrial stocks also helped drive the market higher Tuesday. Anthem rose 4.0%, Wells Fargo added 1.9% and Boeing gained 1.6%. Household goods makers lagged. Tyson Foods slid 1.5%.
Apple rebounded 1.9% after falling a day earlier. It was the biggest driver of gains in the Dow Jones Industrial Average.
Gains in consumer-oriented stocks were being held back by disappointing financial results from department stores J.C. Penney and Kohl’s.
The latest corporate results nearly cap off an earnings season that has been mixed, but better than Wall Street initially feared. The key concern the companies faced a severe earnings recession has been averted.
DAILY STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 index rose 24 points, or 0.9%, to 2,864. The Dow gained 197 points, or 0.8%, to 25,877. The Nasdaq added 83 points, or 1.1%, to 7,785. The yield on the 10 year Treasury rose to 2.43%.
Major stock indexes in Europe rose.
TRADE ROLLER COASTER: The temporary grace period on new U.S. restrictions on Huwei could be renewed, the government said. That could be feeding traders’ cautious optimism as they await progress in trade talks between Washington and Beijing.
“I’m a bit surprised that the bounce back has been as strong as it has been,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “It speaks to the fact that we’re still in a bull market and, in general, the economics are still pretty solid, and the markets are happy to move up on any sort of positive news, especially if it looks constructive toward trade.”
RETAIL RUT: J.C. Penney slid 6.9% and Kohl’s plunged 12.4% after reporting disappointing first quarter financial results.
Struggling department store operator J.C. Penney reported declining sales and a surprisingly wide loss. The retailer attributed part of the weak quarter to its no longer selling major appliances and furniture.
Kohl’s also fell short of forecasts as it deals with slumping sales. The company also cut its profit forecast for the year.
Department stores have been dealing with increased competition from off-price stores and the constant growth of online shopping.
RECOVERY MODE: Chipmakers reversed course and gained ground on reports the U.S. is easing off sales restrictions to China.
Intel rose 2.0% and Texas Instruments also added 2.1%. Broadcom, which gets about half of its revenue from China, gained 1%. Qualcomm, which gets more than half of its revenue from China, rose 1.4%.
Technology stocks, and chipmakers in particular, have already been under increased pressure because of the ongoing trade war. The latest move to restrict some technology sales could cut into key revenue sources.
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