Stocks closed mixed as blue chips hit another record high but tech names tumbled on the potential for tighter U.S. restrictions on chip sales to China.
The U.S. presidential campaign season is already sending shockwaves through capital markets, notes José Torres, senior economist at Interactive Brokers.
"Semiconductor shares are getting hammered on news that Trump isn't happy with the technology sector's warmth toward Beijing," Torres writes in a note to clients. "Meanwhile, President Biden is rushing to potentially implement the harshest of penalties to chip firms that trade with China to toughen up on the geopolitical front and possibly shore up his dwindling odds of reelection."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Concerns about additional curbs on sales of chips to China sent semiconductor stocks reeling. Magnificent 7 stock Nvidia (NVDA) dropped 6.6%, with Broadcom (AVGO, -7.9%), Advanced Micro Devices (AMD, -10.2%), Micron Technologies (MU, -6.3%) and several other sector names moving in sympathy.
As a result, the tech-heavy Nasdaq Composite tumbled 2.8% to settle at 17,996, while the broader S&P 500 fell 1.4% to 5,588. The blue-chip Dow Jones Industrial Average, however, set its 22nd record close or the year with a 0.6% gain to 41,198.
Today's divergent market action is raising questions about the sustainability of the current bull market. As Interactive Brokers' Torres notes, much of 2024's equity gains have come from "a handful of names currently under direct threat" from political campaigning.
"An important question is if the rest of the market, which generally lacks thrilling tales on a relative basis, can offset the waning momentum in the Magnificent 7 stocks," the economist says.
J&J helps the Dow
Johnson & Johnson (JNJ, +3.7) was a leading gainer among all 30 Dow Jones stocks after posting better-than-expected earnings. The pharmaceutical giant reported earnings per share (EPS) of $2.82 for the second quarter vs analysts' average estimate of $2.71. Revenue topped $22.3 billion, which was essentially in line with estimates.
Although Johnson & Johnson has long been one of the best dividend stocks for dependable dividend growth, its returns have been less than stellar. Indeed, JNJ trails the broader market for the year to date and has generated negative annualized total returns for the past one- and three-year periods.
Acquisitions, spin-offs and other moving parts make it tough for analysts to update their models. That's partly why the Street is sort of split on the JNJ at current levels.
Of the 23 analysts covering JNJ surveyed by S&P Global Market Intelligence, seven rate it at Strong Buy, five say Buy and 11 have it at Hold. That works out to a consensus recommendation of Buy, albeit with tepid conviction at best.
Related content
- Why Amazon Stock Is the Biggest Bargain on Amazon Prime Day
- If You'd Put $1,000 Into Amazon Stock 20 Years Ago, Here's What You'd Have Today
- All 30 Dow Jones Stocks Ranked: The Pros Weigh In
-
Stock Market Today: Solid Signals Lift Stocks Despite Tariff NoiseMarkets are whistling over the White House in an ongoing display of corporate America's enduring ability to survive and advance.
-
Amtrak Joins Prime Day With Deals on Fares — But You’ll Have to Act FastPrime members can score 20% off midweek fares — what travelers should know before booking.
-
Stock Market Today: Solid Signals Lift Stocks Despite Tariff Noise
Markets are whistling over the White House in an ongoing display of corporate America's enduring ability to survive and advance.
-
Dividend Increases: 7 Stocks With Rising PayoutsWhile dividend growth has been slowing, certain stocks have raised their dividend payouts. These are some selections.
-
Key to Financial Peace of Mind: Think 'What's Next?' Rather Than 'What If?'Even if you've hit your magic number for retirement, it's hard to stop worrying about money. Giving it a clear purpose is one way to reduce financial anxiety.
-
Three Estate Planning Documents a Business Owner Can't Afford to SkipA business owner's estate plan should protect the company and its employees as well as the entrepreneur's heirs. These three documents are critical.
-
Stock Market Today: Trump's Copper Comments Cause a StirMarkets remain resilient and monetary policy makers stand fast against a rising tide of new terms of trade, including around copper.
-
Opportunity Zones: An Expert Guide to the Changes in the One Big Beautiful BillThe law makes opportunity zones permanent, creates enhanced tax benefits for rural investments and opens up new strategies for investors to combine community development with significant tax advantages.
-
Five Ways Retirees Can Keep Perspective Through Market JittersMarket volatility is a recurring event with historical precedents (the dot-com bubble, global financial crisis and pandemic), each followed by recovery. Here's how people who are near or in retirement can navigate economic uncertainty.
-
Stock Market Today: Trump Reextends His Tariff DeadlineWhen it comes to this president, his trade war, the economy, financial markets and uncertainty, "known unknowns" are better than "unknown unknowns."
