Wall Street ends down; Broadcom warning hits chip stocks

NEW YORK (Reuters) - U.S. stocks ended lower on Friday as investors were cautious going into next week’s Federal Reserve meeting, while a warning from Broadcom of a broad weakening in global demand weighed on chipmakers and added to U.S.-China trade worries.

Shares of Broadcom Inc fell 5.6% after it cut its full-year revenue forecast by $2 billion, blaming the U.S.-China trade conflict and export curbs on Huawei Technologies Co Ltd.

Other chip companies, which both source product and sell heavily in China, dropped sharply. The Philadelphia Semiconductor index tumbled 2.6%.

Investors are bracing for next week’s Fed meeting in light of recent market expectations that the U.S. central bank could cut interest rates as much as three times this year.

Some strategists say stocks are primed for a selloff should the Fed fail to take an even more dovish tilt.

The S&P 500 index has so far gained 4.9% in June and registered a second straight week of gains on Friday, largely on the rate cut hopes.

“We’re going to be on pins and needles until we get some indication from the Fed,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

“That’s what matters. Everybody is betting that the Fed is going to cut rates, probably not in June but soon. That is a very crowded trade.”

The ongoing trade battle between the United States and China also gives investors reason to play it safe ahead of the weekend.

“This is kind of a wait-and-see mode. People are staying very close to their benchmarks,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.