Intel Downgrade Hits Tech Sector
Technology stocks fell hard, as an apparent decline in demand for personal-computer components spurred fears of a sales knock to chip-making giant Intel Corp. (INTC) and its peers.
Several analysts said they had seen a dismal start to August for PC-related orders coupled with piling-up inventories of memory chips, a worrying sign for Intel and other chip makers that were coming off record quarters and had predicted the strength would continue.
In recent trade, Intel shares fell 4.2 percent to $19.79 as the stock, which tends to be a bellwether for the chip industry and for the technology sector as a whole, was downgraded by Baird analysts and had third-quarter estimates cut by both J.P. Morgan Chase and Wedbush analysts.
The Nasdaq Composite Index lagged behind the other major indexes as other technology stocks also stumbled. Among other chip makers, Advanced Micro Devices Inc. (AMD) dropped 6.1 percent to $6.97, Micron Technology Inc. fell 4.3 percent to $7.21 and Nvidia Corp. (NVDA) lost 3.3 percent to $9.32. Storage chip maker LSI Corp. dropped 6.3 percent to $4.21 while disk-drive maker Seagate Technology Inc. fell 6.5 percent to $11.11.