Bay Area stocks drop on trade war concerns
Intel, AMD and Apple among companies whose shares were hit on latest reports of possible tariffs
Bay Area stocks took a beating Monday as investors showed widespread displeasure about reports that President Donald Trump is going to step up the likelihood of an out-and-out trade war with China.
The latest trade rhetoric coming out of the White House is said to include the blocking of some technological exports to China, and preventing companies that are at least 25 percent Chinese-owned from acquiring U.S. companies determined to be involved in certain types of technology industries.
Commerce Secretary Wilbur Ross said in a statement to The Wall Street Journal late Sunday, “The President has made clear his desire to protect American technology.” He added that any methods deemed to better protect American technology, “including potential changes to export controls, are under review.”
Fears about increasing trade tensions with China drove the Dow Jones Industrial Average down by 328.09 points, or 1.3 percent, to end the day at 24,252.80. It was the blue chip Dow’s lowest close since May 4.
“If there’s one thing markets don’t like, it’s uncertainty, and right now Trump and the brewing U.S.-China trade war is causing a lot of it,” said Jesse Cohen, senior analyst with Investing.com. “It increasingly looks like Washington and Beijing are engaging in a game of chicken, and no one wants to be the first to blink.”
The Nasdaq Composite Index, which includes many of the leading tech stocks, also suffered, falling 160.81 points, or 2.1 percent, to close at 7,532.01.
The broad-based S&P 500 fell 37.81 points, or 1.4 percent, to end the day at 2,717.07.
The report about Trump’s latest salvo at China was enough to hammer the shares of every major tech company around Silicon Valley and the rest of the region. Chipmakers, many of whom maintain manufacturing facilities in China, were among those bruised by the latest trade war fears.
Intel, the world’s largest semiconductor maker, fell by 3.4 percent, to close at $50.71 a share; AMD gave up 4.4 percent, to end the day at $15.11; Nvidia shares slumped by 4.7 percent, to close at $239.12; and Xilinx shares were trimmed by 2 percent, to $65.48.
Among other leading area companies, Apple shares fell 1.5 percent to $182.17; Netflix slumped by 6.5 percent, to close at $384.48 a share; and HP shares gave up 3 percent, to close at $23.09.
Rob Enderle, of tech research firm the Enderle
Group, said that if the Trump administration goes through with the plans reported by The Wall Street Journal, “the collateral damage, if this goes on for a while, could be massive on both sides.”
“It creates a bit of a mess, which is just as much about the fluidity of this thing as it is about the tariffs,” Enderle said. “Acquisitions are being messed up, often the vendors have to absorb the tariffs depending on the relationship or contract. When they start passing through the extra costs, some may eventually get priced out of market in both geographies.”
While as of Monday no local companies spoke out in response to Trump’s latest trade policies, one national company that Trump has lauded as an ally showed its feelings about the administration’s new tariff standards: HarleyDavidson said Monday it will move the production of motorcycles meant for sale in Europe to locations outside the United States. Harley-Davidson said in a filing with the Securities and Exchange Commission that it needed to relocate production of such motorcycles because European Union tariffs imposed in response to new U.S. import taxes would add $2,200 to the average cost of one of its motorcycles if built in the U.S. and then sold in Europe.