August 17, 2018 / 3:57 PM / 3 months ago

US STOCKS-Nasdaq drops as chipmakers lead a slide in tech stocks

* Chip stocks fall on weak Nvidia, AMAT forecasts

* FANGs drop, Netflix down for 6th day in a row; Apple up

* Tesla falls, Musk says go-private tweet not reviewed

* Nordstrom gains after strong quarterly results

* Dow up 0.14 pct, S&P flat, Nasdaq down 0.35 pct (Changes comment, updates prices)

By Shreyashi Sanyal

Aug 17 (Reuters) - The Nasdaq fell on Friday as weak forecasts from chipmakers Nvidia and Applied Materials pushed technology stocks lower, while gains in the defensive telecoms and consumer staples companies helped buttress the S&P 500 and the Dow Industrials.

Chipmaker Nvidia dropped 4.5 percent, while chip equipment maker Applied Materials slid 5.7 percent after the two companies’ current-quarter sales forecasts missed Wall Street estimates.

The Philadelphia Semiconductor Index fell for the fourth straight session and was down 1.25 percent on fears that a two-year chip boom may be losing steam. The tech sector fell 0.29 percent, the most among the 11 major S&P sectors.

Defying the sector’s weakness was Apple, which rose 1.3 percent to a record high. But the other FAANG stocks - Facebook, Amazon, Netflix and Google-parent Alphabet – fell between 1.5 percent and 2 percent. Netflix fell for the sixth straight day.

The group, along with other tech stocks, has been powering the market’s rally, but have come under pressure after disappointing results from Netflix, Facebook and most recently from China’s Tencent Holdings.

Still, Erik Wytenus, global investment specialist at J.P. Morgan Private Bank, said the tech rally was far from over.

“Investors remain positive on tech stocks and U.S. markets to ultimately do double digits in terms of equity return this year,” said Wytenus.

“Markets are going to move back and forth between the strong structural positives like robust earnings and buybacks and overhangs like China and Turkey.”

While China and the United States are set to resume trade talks next week, Turkey could face further U.S. sanctions after a report said a Turkish court rejected an appeal for the release of a detained American pastor.

At 11:30 a.m. EDT the Dow Jones Industrial Average was up 35.03 points, or 0.14 percent, at 25,593.76, the S&P 500 was up 0.54 points, or 0.02 percent, at 2,841.23 and the Nasdaq Composite was down 27.56 points, or 0.35 percent, at 7,778.96.

Eight of the 11 S&P sectors were higher, with the defensive utilities, consumer staples, real estate and telecom sectors gaining between 0.49 percent and 0.70 percent.

Department store chain Nordstrom jumped 11.9 percent after its same-store sales growth beat estimates.

Second-quarter earnings are winding down and have been stronger than expected, with 79.2 percent of the 467 S&P 500 that have reported so far beating estimates, according to Thomson Reuters I/B/E/S.

Tesla shares sank 7.3 percent after CEO Elon Musk told the New York Times his tweet about taking the company private was not reviewed by anybody.

Meanwhile, President Donald Trump has asked the U.S. Securities and Exchange Commission to study the impact of companies filing earnings reports every six months instead of every quarter.

Advancing issues outnumbered decliners by a 1.50-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.19-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and two new lows, while the Nasdaq recorded 37 new highs and 44 new lows. (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur)

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