Nasdaq falls to 2-year low on Monday, led by a decline in chip stocks – CNBC

Markets set for lower open with key inflation data, earnings ahead

Stocks fell on Monday with the Nasdaq Composite index falling to the lowest level in two years as tech shares continue to be the hardest hit in this bear market because of a spiking interest rates.

The Nasdaq Composite fell more than 1.3% to touch its lowest levels since September 2020, weighed down by a slump in semiconductor stocks such as Nvidia and AMD. The S&P 500 also fell, dragged down by semi stocks and dips in major tech names Apple and Microsoft. The benchmark lost about 0.78%.

The Dow Jones Industrial Average shed 77 points, bolstered a bit by gains in Merck and McDonalds.

The slump in semiconductor stocks comes after the Biden administration announced new export controls that limit U.S. companies selling advanced computing semiconductors and related manufacturing equipment to China. Tech shares have also been hit the hardest in this sell-off as rising rates expose their relatively high valuations and raise their cost of capital.

While the bond market is closed, futures on the 10-year Treasury note were lower in Monday trading indicating yields will continue their march higher on Tuesday. Yields move inversely to prices. The price of 10-year Treasury futures were lower by about 0.6%.

Investors were also cautious ahead of key earnings and inflation reports this week that will shed new light on the U.S. economy. Four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi – report Friday. PepsiCo, Delta and Domino’s are also among companies reporting next week.

Beyond inflation, rising interest rates and a cooling economy, U.S. dollar strength may play an important role in earnings.

“We may hear more in the coming weeks on the pressures an exceptionally strong dollar can have on US exports and thus, earnings of US companies, but dollar strength could also play a role in getting the Fed to “back off” from its tightening policy,” Chris Larkin, managing director of trading at E*Trade from Morgan Stanley wrote in a Monday note.

New monthly Producer Price Index data comes Wednesday and Consumer Price Index data comes Thursday.

The Nasdaq’s losses for the year are now greater than 32% after Monday’s decline. The S&P 500 is off by 24% in 2022.

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