Tech Companies Suffer Amid Markets' Trade Slumps

May 23, 2019

By Rebecca Heilweil

Concerns over a trade war between Beijing and Washington have again sent the markets tumbling. The Dow Jones was down by nearly 300 points by the market’s close on Thursday afternoon, recovering slightly from its more than 400-point fall earlier in the day.

Earlier this month, markets fell to their lowest since January 3 after China announced it would institute retaliatory tariffs in response to President Trump’s decision to raise duties on more than $200 billion worth of Chinese goods. While trade negotiations have all but collapsed, new regulations facing American companies that sell to the Chinese telecoms company Huawei, and its 70 associated businesses, are further contributing to investors’ unease.

The tech-heavy Cheddar 50 Index, which measures the performance of Cheddar's 50 top companies closed the day down by more than 2 percent. Technology companies struggled in particular. By the end of trading, Apple ($AAPL) shares were down by nearly 2 percent, Amazon ($AMZN) was down by more than 2 percent, and Nvidia ($NVDA) was by down by nearly 3 percent.

“We have not seen much of in terms of the earnings season that we’re still in the middle of right now that says you shouldn’t worry about trade because everything else is great,” Jeremy Owens, the technology editor at MarketWatch, told Cheddar. “We’re looking for something positive to counteract any of the negative we’re seeing right now.’

“It’s really tough to see because there’s so much uncertainly right now. I think that’s what we’ve really heard, especially from the chip companies,” he said. Technology companies don’t know what to tell investors about on-going trade tensions.

He cautioned that some firms, including Salesforce ($CRM), Adobe ($ADBE), and Oracle ($ORCL), have yet to release their earnings reports. “But for the companies that have already reported, where is the positive going to come from?” asked Owens.

Still, the Cheddar 50’s lowest performers were actually cannabis company Cronos ($CRON), which was down more than 4 percent, and Chipotle ($CMG), which was down more than 5 percent (investors are concerned about rising pork prices triggered by the African swine fever epidemic).

Meanwhile, the S&P 500 finished down more than 1 percent; and the Nasdaq also finished down more than 1.5 percent.