Wall Street’s record-breaking rally ran into a wall Wednesday, as worries about potentially worsening trade tensions with China hit stocks of chip companies. That dragged indexes to their worst day in months, but conditions may have been less discouraging underneath the surface.
The mix offered a continuation of a recent trend that market watchers have called encouraging, one where more stocks are rising rather than just a handful of dominant elites. The smaller stocks in the Russell 2000 were coming off a big five-day winning streak on hopes that interest rates are about to get easier and the U.S. economy will avoid a recession, though the index fell 1.1% Wednesday to hand back some of the gains.
Another major chip company, Taiwan Semiconductor Manufacturing Co., sank after former President Donald Trump criticized the self-governed island claimed by Beijing, which the U.S. is obligated by treaty to defend if it is attacked. “Markets cannot continue indefinitely higher on the backs of just a handful of stocks,” said JJ Kinahan, CEO of IG North America.