Chipmakers, airlines lift Nasdaq; trade worries stall S&P, Dow

A rally in shares of chipmakers and airlines lifted the Nasdaq on Thursday, while the Dow Jones industrials and the S&P 500 wavered due to concerns about the Sino-US trade dispute and the longest US government shutdown ever.

US Commerce Secretary Wilbur Ross said the United States and China were a long way from resolving their trade dispute, but saw a fair chance of a deal. The two countries are trying to meet a March 1 deadline to resolve the dispute, which has roiled market for most of the past year.

Despite the news, chip stocks powered higher on the back of upbeat quarterly results. The Philadelphia Semiconductor Index , which had underperformed 10 of the 11 S&P sectors so far this year, jumped 5.78%.

Xilinx Inc shares surged 17.5% and Lam Research jumped 14.6% after reporting better-than-expected results.

Apple supplier Texas Instruments Inc rose 6.3% after what analysts called better-than-feared results. The company however warned of weak demand in China, a key market for many chipmakers.

“Earnings so far have been a positive for markets,” said Chris Larkin, senior vice president of trading at E-Trade Financial in New Jersey.

“But trade talks and the government shutdown are things that certainly impact markets. People react but no one actually knows what is going on and that in turn increases the volatility.”

Adding to the cautious tone, European Central Bank President Mario Draghi acknowledged that economic growth in the euro zone was likely to be weaker than what was earlier expected due to the fallout from factors, including China’s slowdown.

At 12:46 p.m. ET the Dow Jones Industrial Average was down 66.84 points, or 0.27%, at 24 508.78, the S&P 500 was down 2.42 points, or 0.09%, at 2 636.28 and the Nasdaq Composite was up 26.23 points, or 0.37%, at 7 052.00.

Five of the 11 major S&P sectors were lower, led by losses in the consumer staples and healthcare indexes. The biggest gainer was the technology index, up 0.79%

The Dow Jones Transports index, closely watched by investors to gauge the health of the economy, rose 0.95% after strong results from carriers. The index has outperformed Wall Street’s three major indexes this year.

American Airlines Group, Southwest Airlines Co and JetBlue Airways gained 5% each after reporting quarterly profits that beat analysts’ expectations.

Southwest and JetBlue however said the partial US government shutdown, now in its 34th day, was disruptive

McCormick & Co plunged 12.6%, the most on the S&P, after the seasonings maker’s quarterly profit missed expectations.

Intel climbed 3.6% and Starbucks slipped 1.8%. Both companies are scheduled to report results after the closing bell.

Of the 97 S&P 500 companies that have reported fourth-quarter results, 75.3% have topped profit estimates, according to Refinitiv data.

But the earnings growth estimates for last quarter have dropped to 14.2% from 20.1% at the start of October, while 2019 profit growth estimates have come down to 5.8% from 10.2% in the same period.

Advancing issues outnumbered decliners by a 1.93-to-1 ratio on the NYSE and by a 1.46-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and one new low, while the Nasdaq recorded 14 new highs and 32 new lows.