S&P 500 stumbles on Micron-led plunge in tech, renewed hawkish Fed fears

By Yasin Ebrahim

Investing.com -- The S&P 500 slipped Wednesday, as better-than-expected retail sales data pointing to underlying strength in the economy renewed fears of more hawkish Federal Reserve monetary policy tightening.

The S&P 500 fell 0.8%, the Dow Jones Industrial Average slipped 0.1%, or 18 points, the Nasdaq fell 1.4%.

The Commerce Department reported that retail sales rose 1.3% last month, topping estimates for the 1.0% gain expected. The retail sales control group – which has a larger impact on U.S. GDP –  rose 0.7% beating expectations for a 0.3% rise. 

The strong data is a “decent indication that nominal demand remains fairly robust...suggesting that the Fed still has more work to do to bring it in line with aggregate supply,” Jefferies said in a note.

Tech stocks took a breather from their recent melt-up following pressure from a Micron-led slump in semiconductor stocks.

Micron Technology (NASDAQ:MU) fell more than 7% after the chipmaker warned that the market outlook for 2023 “has weakened,” and cut capital expenditure amid plans to trim supply.

“We do believe there is potential for a longer demand trough that would potentially weigh on the broader technology space (e.g., a recovery that starts later in 2023 or is weaker than projected),” Wedbush said following Micron’s announcement.

Target (NYSE:TGT) fell 13%, pushing the broader retail sector deep in the red after the retailer reported a 50% slump in profit and cut its fourth-quarter guidance, warning of a weaker holiday quarter.

Lowe’s (NYSE:LOW) rallied nearly 5% bucking the trend lower after reporting third-quarter results that topped analysts’ estimates.

Advance Auto Parts (NYSE:AAP) fell 15% after reporting quarterly results that missed on both the top and bottom lines, prompting a string of downgrades from analysts on Wall Street. UBS downgraded the stock to neutral from buy, while Wedbush cut its price target on the stock to $165 from $200.

Despite the move lower in the broader market some on Wall Street continue to bet that stocks will likely grind higher into the year-end, though the advance isn’t likely to be smooth.

“We like the markets overall to push modestly higher into year-end, however this should not assume it will be a smooth trade, as macro uncertainty remains elevated even after some of the inflation data has started to cool,” Janney Montgomery Scott said in a note.