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Chip Stocks Chalk up Gains on U.S.-China Trade Optimism

Investing.com – Throughout the months-long U.S.-Sino trade war, chip stocks have ebbed and flowed with the ups and downs of trade relations between the world's biggest economies. But with recent positive comments from both sides, chip stocks are in the ascendency ahead of aslew earnings from semis this week, including chip bellwether Texas Instruments (NASDAQ:TXN) due Tuesday.

After notching their "phase one" agreement, which has yet to be signed, China and the U.S. stoked optimism, citing progress toward ratifying the deal, sending chip stocks, many of which generate sizable revenue from China, higher. The Philadelphia Semiconductor Index was up about 1.8%.

Following China saying it would work with the U.S. to address the core concerns of each party, White House economic adviser Larry Kudlow expressed optimism about ongoing talks and said that tariffs scheduled for December could be withdrawn if talks continue to go well.

The upturn in sentiment on trade between the two countries marks a sharp contrast from the summer, when trade relations soured, leading the U.S. to not only increase tariffs on Chinese imports, but target companies like Huawei, an important customer for U.S. chip companies.

The U.S., however, temporarily lifted the ban on U.S. companies, allowing them to work with Huawei until August. The reprive was then extended to November.

The uptick in chip stocks comes just a day ahead of the quarterly update from TI, seen as a bellwether for semiconductor companies given its global customer base. Other tech earnings also hit the deck this week, with Xilinx (NASDAQ:XLNX) reporting on Wednesday after the bell and Intel (NASDAQ:INTC) reporting on Thursday after the close.

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