S&P 500 dips as chip stocks and utilities tumble

The S&P 500 fell on Tuesday as chipmakers were dented by ratings downgrades and utilities declined ahead of an expected Federal Reserve interest rate hike, offsetting a boost from the energy sector.

S&P 500 financials, including interest-rate-sensitive bank stocks, dipped 0.38% ahead of the expected rise in interest rates by the Fed on Wednesday. Utilities, which tend to be favoured in low-rate environments because of their solid dividend payments, slid 1.22%

The S&P 500 energy index added 0.57% as Brent oil hit a four-year high, boosted by imminent US sanctions on Iranian exports, and Opec and Russia’s reluctance to raise output.

US consumer confidence unexpectedly rose in September, bringing it closer to levels last seen in 2000, the Conference Board said, underscoring strength in the labor market and the overall economy.

The data pushed the S&P 500 consumer discretionary index up 0.59%.

“A lot of the noise around trade and anything else around politics really hasn’t suppressed consumer confidence nearly to the degree that the other factors have boosted it,” said Mike Dowdall, investment strategist for BMO Global Asset Management, in Chicago.

The Philadelphia semiconductor index dropped 1.70%, weighing on the S&P 500 technology index, after brokerages Raymond James and KeyBanc cut their ratings on a number of chipmakers. Intel fell 2.13% after Raymond James downgraded the stock.

Buoyed by strong economic growth and deep corporate tax cuts, the S&P 500 has gained 9% so far in 2018. But five of the S&P 500 sector indexes are down year to date, including the consumer staples index, down 5.6%. Consumer staples on Tuesday lost 0.73%. The other six are higher, led by the technology index’s 19% rally.

“There are different stories for different sectors, it’s a finicky little market,” said Dennis Dick, a proprietary trader at Bright Trading. “If you’re a money manager, you have to be very careful about what you’re buying.”

The Dow Jones Industrial Average fell 0.26% to end at 26 492.21 points, and the S&P 500 lost 0.13% to 2 915.56.

The Nasdaq Composite rose 0.18% to 8 007.47. Amazon provided the greatest lift to the technology-heavy index, jumping 2.08%.

In extended trade, Nike fell 2.89% after it reported quarterly results.

CenturyLink tumbled 8% after chief financial officer Sunit Patel left the company in a surprise move to join T-Mobile to oversee its integration with Sprint. T-Mobile rose 0.77% and Sprint added 0.31%.

Declining issues outnumbered advancing ones on the NYSE by a 1.20-to-1 ratio; on Nasdaq, a 1.00-to-1 ratio favored advancers.

The S&P 500 posted 31 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 65 new highs and 54 new lows.

Volume on US exchanges was 6.6 billion shares, just below the 6.7 billion average over the last 20 trading days.