|Bid||0.00 x 1100|
|Ask||0.00 x 800|
|Day's Range||94.68 - 97.69|
|52 Week Range||93.88 - 114.55|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.11|
|Expense Ratio (net)||0.35%|
In October, fund managers rotated to energy and material stocks while divesting growth and cyclical stocks. The overweight position in technology stocks declined significantly. As we highlighted in As Tech Leads the Market Decline, What are Investors Eyeing, tech stocks were the frontrunners in the sell-off as they are the same companies that have seen huge upward runs in 2018.
ESPO provides targeted exposure to “the future of sports”: video game and related software developers, streaming services, companies involved in eSports events, and more
Gold, Miners Have Surged on the Market Rout—What’s the Upside? In the current sell-off, technology companies (XLK) (SMH) are leading the decline. Investors’ stretched valuation concerns have been especially acute in the US tech space, meaning that tech stocks are much more vulnerable to higher interest rates.
AMAT stock was impacted by the company’s third-quarter 2018 results (year ending in October). Applied Materials expects revenue of $4 billion with EPS of $0.96 in Q4 2018, which is more than 10% lower than Wall Street revenue estimates of $4.5 billion and EPS projections of $1.17. The ongoing trade war and the earnings cliff have impacted several semiconductor stocks.
October started with a sharp drop in the stock markets as the Federal Reserve increased interest rates by 25 basis points to 2.25%. This was the highest interest rate level since 2008 when the Fed cut rates to near zero to tackle the recession. The stock market reacted after a few days as investors adjusted their financial models.
Does the Sell-Off Imply Market Repositioning for Lower Growth? Technology companies are the ones leading the current market decline. Amazon (AMZN), Netflix (NFLX), and Apple (AAPL) stocks took a sound beating yesterday and plunged 6.1%, 8.4%, and 4.6%, respectively.
Semiconductor stocks have also had a volatile year. These stocks have corrected significantly after trading at record highs earlier this year. The SMH VanEck Vectors Semiconductor ETF (SMH) has fallen 1.5% in 2018. Micron (MU) stock rose from $39.40 on February 5 to $62.62 on May 29. The stock has since declined 33.5% to $41.61. Micron stock has lost 8% this month, and it fell 1.6% yesterday. The 2019 forward price-to-earnings for Micron is 4.06x and 4.24x for 2020.
Welcome to the final quarter of the 2018 Best ETFs contest, which is, admittedly, also our first Best ETFs contest.
Semiconductor companies have started to feel the impact of the US-China trade war. In September, memory chip maker Micron Technology (MU) reported weaker guidance for the November quarter for several reasons, one of which was tariffs. It stated that the new tariffs would reduce its gross margin by 50–100 basis points.
President Donald Trump implemented the second round of tariffs on $200.0 billion in Chinese (FXI) imports on September 24. During the announcement of the second round of tariffs, Trump also warned that his administration planned to impose a third round of tariff on another $267.0 billion in Chinese imports. If Trump implements this latest round of tariffs, almost all Chinese imports would fall under this program.
Some of the concern is centered around the trade war with China and the potential impact on growth in the tech sector. One stock in particular that has been hit harder than others in the past month is Monolithic Power Systems (NASDAQ:MPWR). In the last month, the VanEck Vectors Semiconductor ETF (NYSEARCA:SMH) is down just over 6%, while MPWR stock is down 19.8% during the same period.
Semiconductor stocks have been on fire. Thanks to the widespread proliferation of technology, demand for chips and various semiconductor equipment has burgeoned to unprecedented highs over the past several years. As that demand has boomed, semiconductors have boomed, too.
It has been anything but a level playing field for bulls in NXP Semiconductors (NASDAQ:NXPI) and Cypress Semiconductor (NASDAQ:CY) of late. With more than a few semiconductor stocks like Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) or the VanEck Vectors Semiconductors ETF (NYSEARCA:SMH) trading at or near their intermediate highs, you’d think CY stock was selling chips for the handheld calculator market based on its correction the past couple months and flat 12-month performance.
The PC market has dipped recently, which hurts many semiconductor stocks. However, semiconductors continue to be indispensable in phones, games, cars, military weapons and even home appliances. Also, cloud computing is increasing the number of devices needed to access the cloud.
Semiconductor stocks are being hurt in the short term, but if you take a long-term view, you have the chance to outperform benchmark indexes.
This article is a part of InvestorPlace’s Best ETFs for 2018 contest. Dana Blankenhorn’s s pick for the contest is the VanEck Vectors Semiconductor ETF (NYSEARCA:SMH). Tariffs are unhealthy for economies and other living things.
Cypress Semiconductor (CY) stock fell 6.1% on September 25 and closed trading at $14.57 per share. Cypress lost ~$400 million in market value on the day. The stock is currently trading 3.0% above its 52-week low of $14.16 and 23.0% below its 52-week high of $18.87. The stock has now fallen 3.1% year-to-date. The Semiconductor ETF (SMH) fell 1.6% on September 25.
Advanced Micro Devices (AMD) has been a long-time underdog in relation to market leader Intel (INTC). However, times are changing, and the underdog is emerging as a strong competitor that can gain market share from the market leader.
Brent Hill, Jefferies analyst, and CNBC's Josh Lipton join 'Squawk Alley' to discuss tech stocks they're watching as they make a comeback.
Stacy Rasgon, Bernstein senior analyst and number one analyst ranked by Institutional Investor, joins 'Fast Money Halftime Report' to discuss how chip stocks are doing amid U.S.-China trade tensions and rate hikes.