What Happened?
A number of stocks fell in the afternoon session after President Trump threatened to increase import taxes on Chinese goods, reigniting trade war fears.
The threat was in response to China's move to restrict its exports of rare earth minerals, which are critical to high-tech manufacturing in the U.S. The unexpected announcement shattered a monthslong calm on Wall Street, sending major indices tumbling. The S&P 500 dropped around 1.3%, while the tech-heavy Nasdaq Composite fell 2.7%. Investors reacted by selling off stocks, particularly in the technology and retail sectors, amid concerns that escalating trade tensions could disrupt global supply chains and increase costs for companies.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Design Software company Cadence Design Systems (NASDAQ: CDNS) fell 5.4%. Is now the time to buy Cadence Design Systems? Access our full analysis report here, it’s free for active Edge members.
- Data Infrastructure company Teradata (NYSE: TDC) fell 5.3%. Is now the time to buy Teradata? Access our full analysis report here, it’s free for active Edge members.
- Spend Management Software company American Express Global Business Travel (NYSE: GBTG) fell 2.6%. Is now the time to buy American Express Global Business Travel? Access our full analysis report here, it’s free for active Edge members.
- Sales Software company HubSpot (NYSE: HUBS) fell 2.6%. Is now the time to buy HubSpot? Access our full analysis report here, it’s free for active Edge members.
- Endpoint Security company Varonis Systems (NASDAQ: VRNS) fell 2.7%. Is now the time to buy Varonis Systems? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Cadence Design Systems (CDNS)
Cadence Design Systems’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 2.6% as reports revealed tech giant Oracle is generating lower-than-expected margins in its cloud business and losing money on Nvidia chip rentals.
The news caused Oracle's shares to tumble over 5% and sparked a wider tech sell-off, pulling the S&P 500 and Nasdaq down. Investors are growing concerned about the actual strength and profitability of artificial intelligence demand, which has been a primary driver of the market's recent record-breaking run. Oracle's struggles suggest that the massive capital investments required for AI, such as acquiring expensive chips, may not be translating into immediate or guaranteed profits. This has led to broader anxiety that the AI boom's financial returns might be less certain than previously anticipated, causing traders to pull back from the sector.
Cadence Design Systems is up 9.9% since the beginning of the year, but at $327.34 per share, it is still trading 12.3% below its 52-week high of $373.37 from September 2025. Investors who bought $1,000 worth of Cadence Design Systems’s shares 5 years ago would now be looking at an investment worth $2,832.
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