Shortly after new U.S. tariffs were announced in May 2019, the S&P 500 lost $1.2 trillion. Shortly after that, China retaliated, announcing tariffs on $60 billion worth of U.S. goods, making the situation so much more “fun” that it already was.
Worse, according to analysts at the time, “Our view is this could escalate for at least a matter of weeks, if not months, and it’s really to get the two back to the negotiating table and finish the deal, is probably going to require more pain in the markets. Really the only question is if we need a 5%, 10% or bigger market correction,” said Ethan Harris, Bank of America Merrill Lynch, as quoted by CNBC.
Of course, it took a big bite out of stocks.
However, it may also create a “blood in the streets” opportunity for investors.
The Hardest Hit Stocks with Trade War
Boeing (BA) shares took a hit after the Global Times said China could single out the company as the U.S. China trade war intensifies. At the moment, the stock is down $14.67, or $4.14%. As tweeted in China, “China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China. Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically.”
Intel (INTC) fell because it’s vulnerable with about 25% of sales coming from China.
Apple (AAPL) turned lower because 18% of its sales come from China. “Apple has one of the most significant exposures to Chinese exports to the U.S.…given final assembly for many of its consumer devices is located in China,” wrote analysts at Morgan Stanley, as quoted by Barron’s.
Tesla (TSLA) dropped, as larger tariffs throw a wrench into its international growth strategy. Considering that China is the biggest car market in the world, Tesla needs that market to offset cooling demand in the U.S. Even General Motors (GM) is down slightly with Chinese sales a big part of its bottom line.
However, as we’ve learned from top investors, look to buy the excessive fear.
Other great stocks that got caught up in the pullback, and are worth watching, include:
Cree Inc. (NASDAQ:CREE) provides lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, Taiwan, and internationally. It operates in three segments: Wolfspeed, LED Products, and Lighting Products. It’s just beginning to rebound from an oversold prices of $60. Our near-term target is $80 on the stock.
Etsy, Inc. (NASDAQ:ETSY) operates as a commerce platform to make, sell, and buy goods online and offline worldwide. Its platform includes its markets, services, and technology, which enabled users to engage its community of sellers and buyers. The company offers approximately 45 million items across approximately 50 retail categories to buyers. It also provides various seller services, including direct checkouts, promoted listings, and shipping labels, as well as Pattern by Etsy to create custom Websites; and seller tool and education resources to start, manage, and scale businesses to entrepreneurs primarily through Etsy.com.
The stock was another unfortunate victim of the trade war pullback. However, it appears the worst has been priced into the stock, and that it’s just starting to technically rebound from oversold conditions.