TRADE WAR LOSERS
Microchips, energy, banks stand to suffer
NEW YORK — Looking across the stock market, it’s hard to find a company that isn’t vulnerable in some degree to the U.S.-China trade war.
Stocks of companies that do lots of business with China, such as chipmakers and other technology companies, are obvious candidates for investors to sell when trade worries rise. They have fallen more than the rest of the market whenever President Trump sends out a tweet or speaks about tariffs.
But investors are also looking beyond these first-order effects as they pick out which stocks look susceptible to the trade war. Those picks now include many companies that have no significant ties to China but are still at risk.
That’s why all but 2% of the stocks in the S&P 500 fell on Aug. 5, when worries ratcheted higher after China let its currency devalue to its lowest level in a decade.
The damage has been widespread since Trump shocked investors on Aug. 1 by saying he planned soon to extend tariffs across virtually all Chinese imports.
The latest tariffs cover about $300 million of Chinese goods, many of them consumer products that were exempt from early rounds of taxes. Even though Trump has delayed some of the tariffs, they will ultimately raise costs for U.S. companies bringing goods in from China.
Among the losers in the dispute:
ENERGY COMPANIES
Energy stocks in the S&P 500 have plunged 10.2% since just before Trump sent his Aug. 1 tweet, the worst decline of the 11 sectors that make up the index.
The price of oil has sunk on worries that the trade war will do lasting damage to the global economy. If that happens, countries around the world will have less need to burn oil. The price of benchmark U.S. crude plunged nearly 8% on Aug. 1, its worst day in 4 ½ years.
BANKS
Financial stocks have been the second-worst-performing sector in the S&P 500 in recent weeks as the prospect of less-profitable lending threatens banks’ profits.
The escalation in the trade war has led a growing number of economists and analysts to warn about a possible recession. And those concerns have spread to the bond market, where interest rates have sunk sharply.
MICROCHIP COMPANIES
Companies that make microchips that go into laptops and other electronics have been some of the trade war’s biggest victims because of how dependent they are on China.