Tech stocks take a dive amid fears of a smartphone market slowdown

  • Semiconductor stocks dragged major equity indexes lower on Thursday.
  • The selling pressure stemmed from disappointing earnings guidance from Taiwan Semiconductor, which stoked fears of a global smartphone market slowdown.

The tech-heavy Nasdaq 100 index dropped as much as 1.2% on Thursday amid concerns over a global smartphone market slowdown and the residual effect it could have on microchip manufacturers.

The bellwether Philadelphia Semiconductor Index (SOX) saw losses exceeding 4.5% after Taiwan Semiconductor released second-quarter margin and sales outlooks that fell short of analyst estimates. The disappointing guidance stoked fears that smartphone demand is slowing, and highlighted the unpredictable nature of chip stocks, which are also closely tied to cryptocurrency mining.

Leading the way lower in SOX was MKS Instruments, Entegris, Applied Materials, and Lam Research, which all fell more than 6.7%. Meanwhile, American depository receipts for Taiwan Semiconductor, which trades in Asia, lost 5.9%.

Elsewhere, all but 12 companies in the Nasdaq 100 absorbed losses on the day, with other chipmaker stocks like Skyworks Solutions, Qualcomm, Micron, Intel, and Nvidia filling out index’s bottom decile.

Meanwhile, the Dow Jones industrial average lost 0.7% on Thursday, while the benchmark S&P 500 slipped 1%. Even after the loss, the Philadelphia Semiconductor gauge is still up 2.6% year-to-date.

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