Chipmakers, airlines lift Nasdaq; trade worries stall S&P, Dow

(Reuters) – A rally in shares of chipmakers and airlines lifted the Nasdaq on Thursday, while the Dow Industrials and the S&P 500 wavered due to concerns about the Sino-U.S. trade dispute and the longest U.S. government shutdown ever.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 22, 2019. REUTERS/Brendan McDermid

U.S. Commerce Secretary Wilbur Ross said the United States and China were a long way from resolving their trade dispute, but saw a fair chance of a deal. The two countries are trying to meet a March 1 deadline to resolve the dispute, which has roiled market for most of the past year.

Six of the 11 major S&P sectors were lower, led by losses in the consumer staples and healthcare indexes. The biggest gainers were the technology and energy stocks.

The Philadelphia Semiconductor Index, which had underperformed 10 of the 11 sectors so far this year, jumped 5.63 percent.

Shares of semiconductor companies Xilinx Inc surged 19.9 percent and Lam Research Corp jumped 14.6 percent after reporting better-than-expected results.

Texas Instruments Inc rose 6.2 percent after what analysts called better-than-feared results and the company warned of weak demand in China, a key market for many chipmakers.

Michael O’Rourke, chief market strategist at JonesTrading, said while Ross’s comments were the catalyst for the weak market, the losses were limited as a sharp equities selloff in December has priced in a lot of negativity.

“We’ve had a number of earnings reports that were only okay and were not very impressive, but because the market had sold off through December, we saw some of the names bounce or investors did not respond by selling them,” said O’Rourke, who is based in Greenwich, Connecticut.

Adding to the caution, European Central Bank President Mario Draghi acknowledged that economic growth in the euro zone was likely to be weaker than what was earlier expected due to the fallout from factors, including China’s slowdown.

At 11:31 a.m. ET the Dow Jones Industrial Average was down 53.35 points, or 0.22 percent, at 24,522.27, the S&P 500 was down 2.22 points, or 0.08 percent, at 2,636.48 and the Nasdaq Composite was up 18.20 points, or 0.26 percent, at 7,043.96.

The Dow Jones Transports index, closely watched by investors to gauge the health of the economy, rose 1.04 percent after strong results from carriers. The index has outperformed Wall Street’s three major indexes this year.

American Airlines Group, Southwest Airlines Co and JetBlue Airways Corp gained between 3.6 percent and 4.4 percent after reporting quarterly profits that beat analysts’ expectations.

Southwest and JetBlue however said the partial U.S. government shutdown, now in its 34th day, was starting to hit them.

McCormick & Co plunged 12.9 percent, the most on the S&P, after the seasonings maker’s quarterly profit missed expectations.

Intel Corp, set to report quarterly earnings after the bell, climbed 3.3 percent.

Of the 97 S&P 500 companies that have reported fourth-quarter results, 75.3 percent have topped profit estimates, according to Refinitiv data.

But the earnings growth estimates for last quarter have dropped to 14.2 percent from 20.1 percent at the start of October, while 2019 profit growth estimates have come down to 5.8 percent from 10.2 percent in the same period.

Advancing issues outnumbered decliners by a 2.07-to-1 ratio on the NYSE and by a 1.53-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and one new low, while the Nasdaq recorded 12 new highs and 31 new lows.

Reporting by Shreyashi Sanyal and additional reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur