Nasdaq slides 1% as chipmaker Micron's warning rekindles tech rout

(For a Reuters live blog on U.S., UK and European stock markets, click

or type LIVE/ in a news window)

* Micron falls on lowered revenue forecast

* Semiconductor stocks drop for third session, down 27.3% YTD

* Novavax falls 29% after cutting revenue view by half

* Indexes: Dow slips 0.02%, S&P off 0.31%, Nasdaq down 1.09%

By Bansari Mayur Kamdar and Aniruddha Ghosh

Aug 9 (Reuters) - The tech-heavy Nasdaq fell on Tuesday after a dismal forecast from Micron Technology dragged chip and technology stocks lower, while markets remained on the edge ahead of inflation data that will feed into the U.S. Federal Reserve's rate-hike plans.

A high inflation print on Wednesday, following last week's strong jobs numbers, will likely push the Fed to continue with aggressive rate hikes and weigh on a recent recovery in stocks.

Traders see a 70% chance of the Fed raising interest rates by 75 basis points in September, its third such big hike.

Adding to concerns around a tight labor market and inflation, data showed U.S. worker productivity fell sharply in the second quarter and on an annual basis posted a record decline.

Five of the 11 major S&P 500 sectors fell, with consumer discretionary .SPLRCD , information technology .SPLRCT and communication services .SPLRCL stocks down between 0.7% and 1.5%.

Micron Technology Inc MU.O slid 4.8% as the memory-chip maker cut fourth-quarter revenue forecast and warned of a negative free cash flow in the following quarter as demand for chips used in personal computers and smartphones drop.

Heavyweight peers Nvidia NVDA.O and Advanced Micro Devices AMD.O tumbled about 4% each, extending sharp losses from the previous session after a revenue warning from Nvidia.

"It does add to a general growing realization that the move the market experienced in July was probably more of a counter-trend rally in a deteriorating economic situation for both companies (Micron and Nvidia)," said Robert Stimpson, chief investment officer at Oak Associates Funds.

The broader Philadelphia Semiconductor Index .SOX has declined about 7% in the last three sessions.

Meanwhile, U.S. President Joe Biden signed a landmark bill to provide $52.7 billion in subsidies for U.S. semiconductor production and research and to boost efforts to make the United States more competitive with China's science and technology efforts.

"It's utterly discounted," said Michael Shaoul, chief executive officer at Marketfield, on why chip stocks were unfazed by the bill.

Shaoul said trading volumes remained low due to summer and "it really doesn't take a lot of capital to push over yields or the S&P".

Rate-sensitive growth and technology stocks slipped as U.S. Treasury yields climbed, with megacaps such as Alphabet Inc GOOGL.O and Tesla Inc TSLA.O down more than 1% each.

At 11:41 a.m. ET, the Dow Jones Industrial Average .DJI was down 7.49 points, or 0.02%, at 32,825.05, the S&P 500 .SPX was down 12.96 points, or 0.31%, at 4,127.10, and the Nasdaq Composite .IXIC was down 138.44 points, or 1.09%, at 12,506.02.

Despite a choppy recovery since mid-June, the benchmark index .SPX is down 13.5% this year after hitting a record high in early January as surging prices, hawkish central banks and geopolitical tensions weigh.

Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to Refinitiv data as of Friday.

U.S. vaccine maker Novavax NVAX.O slumped 28.9% after it halved its annual revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States amid a global supply glut and soft demand.

Declining issues outnumbered advancers for a 1.80-to-1 ratio on the NYSE and a 2.46-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 30 new lows, while the Nasdaq recorded 36 new highs and 43 new lows.

Semiconductor stocks lag the tech-heavy Nasdaq Link

Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in
Bengaluru; Editing by Saumyadeb Chakrabarty, Arun Koyyur and
Shounak Dasgupta

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.