Nvidia, TSMC Lead Chip Stocks Lower In Premarket: What's Going On?

Nvidia Corp.‘s NVDA post-earnings sell-off can’t seem to be ending, as the stock was down notably in Tuesday’s premarket trading.

Some of the weakness may have to do with the risk-off mood, relayed by the futures trading, which points to a sharply lower open by Wall Street stocks. Ahead of the crucial monthly jobs report, due on Friday, the risk-off mood is taking hold. The number has ramifications for the Federal Reserve’s rate decision due on Sept. 18. The futures market is currently pricing in a 100% probability of a rate cut, with the probability of a 25 basis-point reduction at 67% and a 50-basis-point cut at 33%.

When risk sentiment wanes, risky bets such as growth stocks typically take a big hit.

Nvidia’s weakness may also have to do with geopolitical tensions that are weighing down on the chip sector. Nvidia’s chip supplier Taiwan Semiconductor Manufacturing Company Limited TSM fell 1.96% in premarket trading on Tuesday after a Nikkei report said China-made chips are now only three years behind the former’s technology, citing findings by teardown experts. The report said the U.S. efforts to obstruct exports of high-performance chips may not be effective as the domestic industry in China is gearing up to take on the challenge with innovation.

Separately, reports suggest China has warned of retaliation if Japan curbed exports of chipmaking equipment to the world’s second-largest economy. Japan has one of the biggest semiconductor equipment companies in Tokyo Electron and the U.S. has been pressuring Japan against selling advanced chipmaking tools to China.

In premarket trading on Tuesday, Nvidia 2.06% to $116.91. Among the other chip decliners are:

• TSMC fell 2.01% to $168.25.
• Micron Technology, Inc. MU moved down 1.77% to $94.54.
• Advanced Micro Devices, Inc. AMD slipped 1.29% to $146.65.
• Arm Holdings plc ARM declined 1.89% to $130.37.
• Intel Corporation INTC retreated 1.17% to $21.79.
• Broadcom Inc. AVGO fell 1.37% to $160.59.
• Marvell Technology, Inc. MRVL traded down 1.135 to $75.38.
• The iShares Semiconductor ETF SOXX fell 1.47% to $227.74.

See Also: Best Semiconductor Stocks

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