Dovish Fed Unable to Save Dow from 100-Point Loss after U.S. Federal Judge Rules Against Qualcomm
The Dow and broader U.S. stock market traded lower on Wednesday after a federal judge ruled that Qualcomm, a leading semiconductor company, had violated antitrust laws for cellphone chips. Markets held lower even after Federal Reserve meeting minutes all but confirmed that interest rates will remain on hold for the rest of 2019.
Dow Slides; S&P 500, Nasdaq Follow
Wall Street’s major benchmarks pared losses in afternoon trading but still finished firmly lower. The Dow Jones Industrial Average closed down 100.72 points, or 0.4%, at 25,776.61. The blue-chip index was down more than 120 points earlier.
The broad S&P 500 Index of large-cap stocks declined 0.3% to 2,856.27. Companies tied to primary industries were the hardest hit, with energy stocks falling 1.4%. The industrials, materials and consumer discretionary components also fell sharply, outweighing sizable gains for utilities and health care providers.
The technology-focused Nasdaq Composite Index closed down 0.5% at 7,750.84.
U.S. Judge Rules Against Qualcomm
Shares of Qualcomm Inc. (QCOM) fell double digits on Wednesday after a U.S. federal judge ruled that the semiconductor giant had illegally thwarted competition for cellphone chips.
As The Wall Street Journal reported, Qualcomm was found to have used its dominant market position to charge excessive licensing fees for its smartphone components. The landmark ruling follows similar verdicts in China, South Korea and the European Union.
Qualcomm is the world’s largest maker of smartphone and wireless network chips. Some of its most prominent customers include Apple and Samsung. In 2017, the company was sued by the Federal Trade Commission (FTC) on grounds that it overcharged customers and blocked competitors from entering the market.
U.S. District Judge Lucy Koh ruled in the FTC’s favor late Tuesday and ordered Qualcomm to renegotiate its licenses with customers.
Fed Reaffirms Patient Approach
The Federal Reserve sees no reason to change course on monetary policy anytime soon despite the recent drop in inflation, the minutes of the April 30-May 1 meeting revealed on Wednesday.
Federal Open Market Committee (FOMC) members “observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time,” the official transcript read.
Featured image courtesy of Shutterstock. Chart via Stockcharts.com.