What Happened?

A number of stocks fell in the afternoon session after the threat of a 'massive increase' in tariffs on Chinese goods by President Donald Trump, reignited fears of a trade war. 

In a social media post, Trump described China as becoming 'hostile,' sending a ripple of concern through the market. The semiconductor sector, which relies heavily on global supply chains and sales in China, was hit particularly hard. The Philadelphia SE Semiconductor index dropped 3.4% following the announcement. This development adds to existing tensions, including Beijing's recent expansion of export controls on rare earths and an antitrust probe into Qualcomm's acquisition of Autotalks. Investors demonstrated caution as the prospect of escalating trade disputes between the world's two largest economies could disrupt production and demand for chipmakers.

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:

• Semiconductor Manufacturing company Marvell Technology (NASDAQ: MRVL) fell 3.2%. Is now the time to buy Marvell Technology? Access our full analysis report here, it’s free for active Edge members.
• Memory Semiconductors company Seagate Technology (NASDAQ: STX) fell 3.4%. Is now the time to buy Seagate Technology? Access our full analysis report here, it’s free for active Edge members.
• Memory Semiconductors company Western Digital (NASDAQ: WDC) fell 3.2%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free for active Edge members.
• Analog Semiconductors company Skyworks Solutions (NASDAQ: SWKS) fell 3.5%. Is now the time to buy Skyworks Solutions? Access our full analysis report here, it’s free for active Edge members.
• Analog Semiconductors company Texas Instruments (NASDAQ: TXN) fell 3.1%. Is now the time to buy Texas Instruments? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Skyworks Solutions (SWKS)

Skyworks Solutions’s shares are somewhat volatile and have had 12 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 about 23 hours ago when the stock dropped 3.8% on the news that China announced new export controls on the critical minerals. Beijing's Commerce Ministry stated that foreign suppliers now need government approval to export products containing certain rare-earth materials. These materials are essential for producing high-tech goods, including computer chips, electric vehicles, and defense technology. Analysts view the move as a strategic assertion of China's dominance in the global rare earth supply chain, particularly amid ongoing trade tensions and ahead of an anticipated meeting between the US and Chinese presidents. The new policies are expected to tighten global supply chains, potentially causing licensing delays and cost increases for manufacturers in key strategic sectors. Also, investors paused a record-setting rally amid uncertainty from the ongoing U.S. government shutdown. The S&P 500 and Nasdaq pulled back from all-time highs as the shutdown entered its second week, creating a data vacuum for investors. The political impasse has halted the release of vital economic indicators, including key reports on jobs and inflation. Without this crucial information, it becomes more difficult for the Federal Reserve and market participants to accurately assess the nation's economic health. This uncertainty has prompted traders to take profits following a prolonged period of gains. In the absence of official data, investors are paying close attention to upcoming speeches from Fed officials for any guidance on future monetary policy. In addition, Jamie Dimon raised concerns about a market correction. He added, "I would give it a higher probability than I think is probably priced in the market and by others, so if the market is pricing in 10%, I would ... say it's more like 30%." Dimon's remarks are closely watched, given his influence as head of one of the nation's largest banks.

Skyworks Solutions is down 19.4% since the beginning of the year, and at $71.27 per share, it is trading 28.1% below its 52-week high of $99.15 from October 2024. Investors who bought $1,000 worth of Skyworks Solutions’s shares 5 years ago would now be looking at an investment worth $453.69.

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