Key Takeaways:
U.S. equities opened lower Tuesday, with the Nasdaq Composite falling 0.73% as a sharp drop in Under Armour Inc. and a broad-based selloff in chipmakers soured investor sentiment.
"The company's results were hurt by higher costs, resulting mostly from higher tariffs and product-price inflation," Tomi Kilgore of MarketWatch noted in a report.
Under Armour (UAA) shares plunged 15% after the athletic gear maker projected fiscal 2027 revenue would decline about 4% to $5 billion and forecast adjusted earnings of 8 to 12 cents per share, well below the 23-cent consensus. The semiconductor sector also faced heavy selling pressure, with Intel Corp. and Qualcomm Inc. both falling 4%, while ASML Holding NV slid 3%.
The weak outlook from a major consumer brand like Under Armour, coupled with its extended restructuring plan, highlights persistent margin pressures from inflation and rising costs that could signal a challenging environment for the broader retail sector.
The Dow Jones Industrial Average opened down 0.04% and the S&P 500 lost 0.35% in early trading on May 12.
Under Armour's guidance follows a fiscal fourth quarter where its gross margin dropped 2.2 percentage points to 45.5%, according to its latest earnings report. The company now expects its restructuring plan to cost approximately $305 million, an increase from the previous $255 million estimate, extending the timeline through 2026.
The selloff in technology was widespread. Beyond Intel and Qualcomm, other major chip stocks also declined, including Micron Technology Inc. (-3%), Advanced Micro Devices Inc. (-2%), and Taiwan Semiconductor Manufacturing Co. (-1.73%). The decline follows several days of gains for the sector.
The negative start to the day for U.S. stocks contrasts with the market's performance year-to-date, where the S&P 500 had advanced 8.3% through Monday's close.
This article is for informational purposes only and does not constitute investment advice.
