Semiconductor Stocks Slip Amid Supply Chain Disruptions

Strategic Insights -

Wall Street's semiconductor stocks took a hit on Monday, driven by the ongoing supply chain disruption stemming from flooding in Thailand. As factories in Thailand, a key hub for hard drive manufacturers, remain closed, concerns are growing about the impact on the sector. Analysts warn that this may indicate renewed concerns about global growth, given the widespread use of chips in various industrial processes and computer products.

Key Takeaways:

  • Semiconductor stocks fell across the board, with Texas Instruments and Nvidia slipping 0.8% and 0.5%, respectively.
  • The Philadelphia Sox index of semiconductor stocks dropped 0.2%, weighing on the Nasdaq Composite index.
  • Analysts attribute the decline to macro headwinds, with industry-wide guidance for the fourth quarter down 10% and numbers for 2012 set very low.
  • The S&P 500 and Dow Jones Industrial Average rose 0.6% and 0.7%, respectively, while the Nasdaq lagged behind with a 0.3% gain.
  • Solar stocks, particularly First Solar and MEMC Electronic Materials, dropped 3.7% and 4.1%, respectively, as investors become increasingly cautious about Europe's sovereign debt crisis.
  • Analyst Mehdi Hosseini stated that solar companies need to become competitive with coal producers, as government subsidies will not sustain double-digit margins.
  • Jefferies' exposure to eurozone sovereign debt appears to be easing after the company halved its holdings, with shares closing up 1.4% to $12.24.
  • Analysts at Egan-Jones remain unconvinced by Jefferies' reassurance, citing the need for leverage to come down from its current 11.9 to 9.
  • Alcoa slipped 1.7% to $10.75 after announcing the next phase of its five-year, $2.1bn investment plan for smelters in Quebec.
  • Best Buy Company's shares dropped 3.1% to $26.46 after it decided to buy out its partner in its US mobile-phone retailing operation.
  • Biotech company Amgen led the S&P 500 movers, up 5.9% to $58.43, after committing up to $5bn to a share buy-back program.
  • Sysco Corporation's shares were up 0.3% to $27.88 after it reported steady profits compared to the same quarter in 2010.

Statistics:

  • Texas Instruments stock price: $31.53 (down 0.8%)
  • Nvidia stock price: $14.74 (down 0.5%)
  • Philadelphia Sox index: down 0.2%
  • Nasdaq Composite index: up 0.3% to 2,695.25
  • S&P 500: up 0.6% to 1,261.12
  • Dow Jones Industrial Average: up 0.7% to 12,069.39
  • First Solar stock price: $47.74 (down 3.7%)
  • MEMC Electronic Materials stock price: $4.98 (down 4.1%)
  • Jefferies' shares: up 1.4% to $12.24
  • Amgen's share buy-back program: up to $5bn
  • Sysco Corporation's profits: compared to the same quarter in 2010

Sources:

  • "US stocks fall as concerns over Asia and Europe weigh" by Barani Krishnan in New York, Wall Street Journal.
  • "Semiconductor stocks drop on supply disruptions" by Onoor Walehangama, Wall Street Journal.
  • "First Solar and MEMC Electronic Materials drop as investors flee" by Lisa Schumacher, CNBC.
  • "Jefferies' exposure to eurozone debt appears to be easing" by Ian Fleming, Financial Times.
  • "Alcoa slips after announcing next phase of $2.1bn investment plan" by Ted Perry, Bloomberg.
  • "Best Buy Company's shares drop after deciding to buy out partner" by Lewis Wang, Reuters.
  • "Biotech company Amgen leads S&P 500 movers" by Michael Rheer, Bloomberg.
  • "Sysco Corporation's shares rise after reporting steady profits" by Margaret A. Johnson, Dow Jones.