During the week, after hitting a historic high, tech stocks faced a sharp decline on Thursday, with the Nasdaq Composite dropping 4% this week, becoming a major driver of the market pullback.
From the perspective of specific company performance, tech giants faced setbacks. Apple fell 4%, giving back part of its 15% gain on Wednesday, despite that increase marking its best single-day performance since January 1998; the pullback this week still impacted its stock price. Tesla and Meta dropped about 7%, while Amazon and Nvidia each fell by at least 5%, and Microsoft and Google decreased by about 2% and 4%, respectively.
Semiconductor stocks were not spared either. Semiconductor stocks that rely on production and manufacturing outside the U.S. saw declines, with the VanEck Semiconductor ETF dropping 7% after achieving its best historical performance. Although the chip manufacturing sector was not directly affected by the recent tariffs, concerns that tariffs would erode demand and harm the economy led to a sell-off in chip manufacturers' stocks. ON Semiconductor, Marvell Technology, as well as Apple suppliers Qorvo and Skyworks Solutions saw their stock prices plummet over 11%, while AMD, Intel, and Micron Technology fell by 10%.
The main reason for the market reversal was policy factors. U.S. President Donald Trump announced a 90-day suspension of certain tariffs and lowered tariffs for most countries to 10% for negotiations, which caused the market to give back part of its previous strong gains. However, the White House confirmed to CNBC on Thursday that the cumulative tariff rate on China would reach 145%, further exacerbating market concerns.
Trump positioned these tariffs as a means to encourage companies to produce chips in the U.S., mentioning TSMC's $100 billion investment in Arizona, a plan that was initiated during the Biden administration with support from the CHIPS and Science Act. However, industry experts expressed skepticism. Truist analyst William Stein surveyed 10 semiconductor manufacturers and distributors, none of whom indicated plans to relocate operations to the U.S. in response to these tariffs. One respondent even mentioned that due to doubts about the permanence of these tariffs, some companies are avoiding large-scale investments at new locations.
Looking ahead, the U.S. stock market faces many uncertainties. The direction of tariff policies, corporate earnings, and the performance of macroeconomic data will all have significant impacts on the market. Investors need to closely monitor policy changes while assessing companies' fundamentals and valuation levels to make reasonable investment decisions. In the current environment of high market volatility, investors should remain cautious and build diversified portfolios to mitigate risks.
