U.S. stocks dropped Monday at midday on Wall Street as investors struggled to shake off the steep losses incurred in May.
Declines in some major technology and internet companies weighed on the markets and offset gains in industrial and health care stocks.
Google’s parent Alphabet fell as media reports suggested it faces an antitrust investigation by the Justice Department. Those reports also suggested Amazon could come under increased regulatory scrutiny. Facebook also weighed on internet stocks, falling 3.5%.
Technology companies also fell broadly. Microsoft shed 1.3% and Adobe fell 1.7%. Apple rose slightly ahead of its annual software showcase .
Among the gainers, Amgen rose 3.5% and Merck rose 1%. General Dynamics rose 2%.
The indecisive trading follows the first monthly loss for the market in 2019 as investors deal with uncertainty over the U.S. and its growing use of tariffs in international trade disputes. As of Friday, the S&P 500 was down 6.6% from its record set on April 30.
Investors spent the bulk of May fleeing to safer holdings as a global trade war flared up. China and the U.S. have been escalating their trade dispute with more tariffs on each other’s goods while also threatening to ban technology and resource sales. The U.S. expanded its trade war and threatened to impose tariffs on Mexican goods starting June 10 because of an immigration dispute.
All of these moves have rattled investors and their confidence in prospects for global economic growth. Bank of America Merrill Lynch lowered its earnings estimates for companies in the S&P 500, citing trade tensions. Analysts have also warned that uncertainty over trade deals will crimp business confidence and keep companies from investing internationally.
KEEPING SCORE: The S&P 500 index fell 0.1% as of 12:10 p.m. Eastern time. The Dow Jones Industrial Average added 5 points, or 0.1%, to 24,822. The technology-heavy Nasdaq composite fell 0.7%.
DEAL OR NO DEAL: News of deals, made and denied, drove movement for several stocks early Monday.
Cypress Semiconductor surged 24.6% on the announcement that German chipmaker Infineon is buying the company for more than $10 billion in cash. Cypress Semiconductors specializes in wireless and USB technology and Infineon said the deal with create the eighth biggest chipmaker in the world and a leading supplier of chips to the automotive sector.
Centene slid 9.4% after Humana declined to make a buyout proposal. Both insurance companies focus heavily on government-sponsored plans, including Medicare and Medicaid. Humana made clear that it is not seeking Centene in a rare filing aimed at quashing investor speculation.
El Paso Electric rose 14.2% after getting a $2.78 billion buyout offer from a private equity fund affiliated with J.P. Morgan.
ANXIETY PUSHES DEFENSE: The U.S. decision to expand its trade war beyond China is adding to fears that economic growth and corporate profit growth will take a hit this year.
“Things are likely to get worse before they get better,” said a Bank of America Merrill Lynch report.
The investment bank is recommending more caution from investors as trade disputes play out. Investors have already been heading to less-risky holdings, including utility stocks and bonds, since the trade dispute with China sharply escalated in May.
Companies in the S&P 500 performed better than expected in the first quarter, posting less than a half-percentage point contraction in profit, according to Factset. But, the trade war continues hanging over the current quarter, with analysts expecting a 2% contraction in corporate profit.
INTERNET INVESTIGATIONS?: Alphabet, the parent company behind search engine Google, shed 6% following media reports that it could face an antitrust investigation by the Department of Justice.
The company has faced a series of European regulatory investigations into its practices. In one instance last year, it was fined $5 billion by European regulators over contracts dealing with smartphone makers and the search engine’s apps.
The speculation over the latest investigation comes on top of a tough weekend for the company when high levels of network congestion caused user outages in some of its services, including YouTube and Google Cloud.
Meanwhile, Amazon could face scrutiny from the Federal Trade Commission. Reports say consumer groups and vendors have complained that the company is unfairly edging out competition as it expands its business and offerings. The stock slipped 3.5%.