Why Micron Stock Is Sinking Today
Key Points
Micron stock is falling today as investors react to the latest jobs report from the Bureau of Labor Statistics.
Jobs growth was stronger than expected in May, but that's causing investors to worry that the Federal Reserve will raise interest rates.
Nvidia confirmed that it had certified high-bandwidth-memory chips from Micron for use in its AI accelerators.
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Micron (NASDAQ: MU) stock is losing ground in Friday's trading. The memory chip company's share price was down 5.3% as of 10:45 a.m. ET amid a 1% decline for the S&P 500 and a 2% decline for the Nasdaq Composite.
The broader market is getting hit with strong selling action today as investors weigh the risks of the Federal Reserve potentially raising interest rates this year. While there is an item of positive, business-specific news for Micron today, it hasn't been enough to stop the stock from selling off.
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Investors are worried about rate hikes
Before the market opened this morning, the Bureau of Labor Statistics published jobs numbers for May that showed employment growth that was much stronger than anticipated. The report showed that 172,000 nonfarm payroll positions were added in May, which came in far ahead of the 80,000 job additions forecasted by economists.
While stronger-than-expected jobs growth looks like a positive development from one vantage point, it also makes it more likely that the Federal Reserve will raise interest rates this year. The Fed is tasked with supporting economic growth and curtailing inflation, and strong jobs growth gives the Fed more leeway to focus on keeping inflation down. If the Fed hikes rates this year, it could hamper bullish momentum for Micron and other tech stocks.
Nvidia gives Micron another official vote of confidence
Nvidia CEO Jensen Huang recently announced that it had certified new high-bandwidth-memory (HBM) chips from Micron for inclusion in its artificial intelligence (AI) accelerators. Along with Micron, the company also certified memory chips from Samsung and SK Hynix. While the official go-ahead from Huang is good news for Micron, it was likely already priced into the company's stock -- and investors appear to be focused on macroeconomic risks in today's trading.
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Keith Noonan has positions in Micron Technology. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.
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