How Washington undermining stock market
WALL Street pummelled leading technology stocks last Monday amid fears that some of the country’s most dynamic companies were facing political, regulatory and market challenges that could hinder the industry’s growth for months or years.
President Donald Trump’s ongoing attacks on Amazon, which he criticised in a series of tweets over its taxation policies and its supposedly unfair shipping deal with the US Postal Service, pushed the company’s shares down 5.2 per cent and helped lead the tech-heavy NASDAQ index down 2.7 per cent. The NASDAQ is 9.5 percent off its peak last month.
Trump’s bellicose talk on trade and retailitory moves by China also spooked Wall Street, helping drive down the Dow Jones Industrial Average by 1.9 per cent. It’s now off more than 11 per cent from its peak in January, signalling an official market correction.
But it was the tumbles by a wide range of technology giants that drew particular attention from traders. The most valuable US companies - Apple, Google parent Alphabet, and Microsoft - all closed down on Monday.
Tesla fell 5.1 per cent amid fears about its ability to meet production targets and the safety of its vehicles following a fatal crash last month. Intel fell 6.1 per cent on reports that longtime partner Apple may begin making its own computer chips. And Facebook fell 2.8 per cent as new scrutiny over its privacy practices loomed on Capitol Hill, which has hearings on the subject scheduled for next week.
Taken together, the declines fuelled concern that growing hostility from Trump and rising criticism from both Democrats and Republicans on Capitol Hill was building into a moment of reckoning for the technology industry that could damage a vital part of the US economy.
“A number of tech companies are facing reputational challenges, including Facebook, Google, and now Amazon, with the president’s latest salvo about their purported unfair competition,” said Rob Atkinson, president of the Information Technology Industry Foundation, a think tank that counts tech executives on its board.
“The market appears to believe that these will translate into new policy challenges for the sector, including potentially Europeanstyle anti-trust enforcement and privacy regulation.”
Trump’s criticisms of Amazon, which started last week and continued into Monday, include allegations that its online commerce business receives discounts that cost the Postal Service needed revenue.
“Only fools, or worse, are saying that our money losing Post Office makes money with Amazon,” he tweeted Monday morning. “THEY LOSE A FORTUNE, and this will be changed.”
Trump has not been alone in questioning Amazon’s business practices. Sen. Bernie Sanders, I-Vt., said on Meet the Press on Sunday that Amazon had grown too large. Senator Marco Rubio, on Monday said in a tweet that Amazon’s growth “could mean less competition” in the marketplace.
The company, which declined to comment on these allegations, lost more than US$ 36 billion in value last Monday.
Trump last week also attacked The Washington Post, which is personally owned by Amazon founder and chief executive Jeff Bezos. The president incorrectly conflated Amazon with The Post, alleging that it serves as a “lobbyist” for the online giant. The Post operates independently of Amazon.
“No one at The Post is paid by Amazon or does work of any type on behalf of the company. The Post is an independent news organisation,” said a spokeswoman for The Post. — WP-Bloomberg