By Yasin Ebrahim
Investing.com -- The S&P 500 pared some losses Thursday, but was pressured by a slump in chip stocks after the U.S. government restricted sales of chips to China.
The S&P 500 rose 0.7%, the Dow Jones Industrial Average added 0.3%, or 102 points, the Nasdaq was up 1%.
Advanced Micro Devices (NASDAQ:AMD) and Nvidia led the slip in the chip stocks after the U.S. government imposed new restrictions on the sale of artificial intelligence chips to China.
NVIDIA (NASDAQ:NVDA) said about $400 million of sales in China could be affected by the rule, sending its shares more than 10% lower. Advanced Micro Devices fell more than 5%.
Nvidia said it would apply for a license to continue some China exports, and some analysts believe the company will likely be granted an exemption as the chipmaker’s customers in China aren’t linked to the Chinese government.
“[W]e believe NVDA's largest Chinese customers are large Internet/Cloud companies that are not affiliated with the Chinese government/military,” Wedbush said in a note.
Seagate Technology (NASDAQ:STX), down nearly 3%, also added pressure on chip stocks after the memory storage company cut its sales outlook amid worries about a deteriorating global macroeconomic backdrop.
Big tech, meanwhile, continued to feel the pain from a jump in Treasury yields as data showing the labor market remains robust and manufacturing activity improved is expected to support the Federal Reserve’s plan to persist with rate hikes.
Initial jobless claims fell 5,000 to 232,000 in the week ended August 27, confounding the consensus call for claims to rise to 248,000.
“The labor market remains very tight, and the claims data do not show any shifts in momentum,” Jefferies said in a note.
Manufacturing activity, meanwhile, climbed to a reading of 52.8 in August, above the consensus of 52.
The stronger labor market data comes a day ahead of the monthly jobs report expected to show the economy created about 300,000 last month.
Twitter (NYSE:TWTR) fell less than 1% after confirming plans to roll out an “Edit Tweet" feature, which will be expanded to Twitter Blue subscribers in the coming weeks.
In earnings news, Campbell Soup (NYSE:CPB) slipped nearly 3% after the food producer’s better-than-expected quarterly results were overshadowed by worries about the risk of growing inflation pressures.
Signet Jewelers (NYSE:SIG) delivered mixed quarterly results as revenue fell short of expectations, and the company said it continues to expect demand for jewelry to fall as consumers shift spending to experiences.