Stocks sink as Micron's warning renews tech rout

STORY: U.S. stocks ended lower on Tuesday after a dismal forecast from chipmaker Micron Technology pulled down semiconductor and tech stocks as investors awaited inflation data due out Wednesday.

The Dow ended down fractionally, while the S&P 500 finished about four tenths of a percent lower. But the Nasdaq fell more than a percent as the rout in chip stocks hit the tech-heavy index.

But Chris Konstantinos, chief investment strategist at Riverfront Investment Group, said it was fears over Wednesday's consumer price index report that may have been the biggest drag on stocks.

"I think that the market is fairly nervous about the CPI (Consumer Price Index) print tomorrow. And I think it has a reason to be nervous because inflation numbers have been a big driver of market moves recently. I think the reason is because if the CPI print comes out quite strong tomorrow, I believe that the Federal Reserve is going to have to remain very aggressive in terms of future interest rate hikes in order to battle inflation. The inflation genie is out of the bottle, so to speak, and as we learned from the 1970s, this can be a very dangerous situation for the economy. So, the Federal Reserve is hyper aware and hyper vigilant towards not getting further behind the curve."

Shares of Micron Technology fell more than three and a half percent after the memory-chipmaker cut its fourth-quarter revenue forecast and warned of cooling demand for chips used in PCs and smartphones.

Micron's warning came a day after Nvidia forecast weakness in its video game chip business. Shares fell another 4% on Tuesday.

Chip stocks unable to get a boost even as President Joe Biden signed into law a nearly $53 billion bill that's designed to boost U.S. semiconductor production.

And shares of Occidental Petroleum rose nearly 4% after Warren Buffett's Berkshire Hathaway once again increased its stake in the energy company. Occidental's shares have more than doubled in price this year.