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President Trump’s saber rattling in trade negotiations with China scared investors this morning, but cooler heads prevailed and stock prices recovered most of their early losses.
The President threatened to increase the current ten percent tariff on $200 billion of Chinese goods to 25 percent by Friday if no deal is reached. He suggested the tariffs might soon apply to the rest of Chinese exports — some $325 billion — as well. Stock prices plunged with the Dow falling by nearly two percent in early trading.
Stock prices recovered through the rest of the day, however, as investors realized that the Chinese trade delegation was still coming to Washington to resume negotiations this week.
The Dow index ended the day down 0.25 percent while the S&P 500 and Nasdaq Composite indexes fell 0.45 percent and 0.5 percent respectively. The Entrepreneur Index™ declined 0.31 percent, with trade-sensitive stocks posting the biggest losses.
Casino-operator Wynn Resorts, hyper-sensitive to China and to trade relations with China, had the biggest decline on the Entrepreneur Index™ today, falling 4.07 percent. With its gaming license in Macau, where it derives more than 70 percent of its revenue, up for renewal soon, an ongoing trade war with China could be disastrous for the company. The stock is up 42.6 percent this year in large part because of optimism about a trade deal with China.
Other companies with big exposures to the Chinese market were also down sharply. Cosmetics maker Estee Lauder Companies, which has a large and fast-growing Asia Pacific business, was down 2.51 percent. PACCAR Inc. had record global truck deliveries in the first quarter. It’s stock fell 2.73 percent today.
The clothing makers and retailers, many of whom sell and source products in China, were also down today. Ralph Lauren Corp. (-2.34 percent), Under Armour Inc. (-1.8 percent) and Gap Inc. (-1.23 percent) all fell.
The technology sector was generally weak, with chip-makers NVIDIA Corp. (-1.73 percent) and Analog Devices (-1.73 percent) posting the biggest declines. Alphabet Inc., up 0.25 percent, was the only FAANG stock on the index to post a gain.
TripAdvisor Inc. shares had the biggest increase in the sector, rising 2.07 percent.
Tyson Foods beat both earnings and revenue estimates by a good margin and saw its shares jump 2.61 percent, the biggest gain on the Entrepreneur Index™ today. One of the largest meat producers in the world, Tyson also announced it would introduce its own plant-based meat substitute products this summer. The company recently sold its investment in Beyond Meat, which went public last week.
Fellow food-maker J.M. Smucker Company was also up nicely, rising 1.3 percent and setting a new 52-week high today.
Regeneron Pharmaceuticals was up 2.18 percent as investors anticipate good financial results when the company reports earnings before the market opens tomorrow. The stock is down 7.8 percent so far this year.
The Entrepreneur Index™ collects the top 60 publicly traded companies founded and run by entrepreneurs. The entrepreneurial spirit is a valuable asset for any business, and this index recognizes its importance, no matter how much a company has grown. These inspirational businesses can be tracked in real time on Entrepreneur.com.
May 6, 2019 at 05:23PM