Tech Stocks Plummet as China Retaliates in Ongoing Trade War
U.S. tech stocks lose a combined $162 billion in market value as China halts agricultural imports and weakens the yuan. Investors fear upcoming tariffs will severely impact hardware sales for major tech companies.
All U.S. stock markets drop severely today, and tech stocks take an especially hard hit as China retaliates to increasing U.S. tariffs. China halts imports on U.S. agricultural goods and allows the yuan to slide in value against the dollar, which pushes the Nasdaq down by 3.4%. The biggest tech companies, including Microsoft, Amazon, Apple, Facebook, and Alphabet, lose a combined $162 billion in market value.
The decline happens as China lets its currency fall below a previously established red-line in its currency peg against the dollar. This devaluation makes Chinese goods look more attractive globally as their prices decline in relation to the dollar, and it potentially triggers a wave of currency devaluations and protectionist measures worldwide. These actions put further downward pressure on global economic growth and exacerbate market fears.
Stocks also feel the pinch from the threat of new U.S. tariffs on Chinese goods set to begin in September. These tariffs target everyday consumer goods and clothing, which adversely affects tech companies that rely on hardware sales. Analysts warn that if smartphones, tablets, smart watches, and computer systems are not excluded from the final tariff tranche, there will be a material impact on hardware product earnings for companies like Apple.