What Happened?
A number of stocks fell in the afternoon session after worries over worsening trade relations with China were triggered by critical comments from President Donald Trump.
Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The president's tone and the suggestion of canceling a meeting with President Xi caused a rapid sell-off in the market.
Earlier in the week, 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 viewed 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.
Consequently, technology stocks with significant exposure to Chinese supply chains, such as Nvidia and AMD, experienced sharp declines. This downturn was exacerbated by the bearish sentiment surrounding a prolonged U.S. government shutdown, adding to overall market uncertainty.
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:
- Electronic Components & Manufacturing company Coherent (NYSE:COHR) fell 6.8%. Is now the time to buy Coherent? Access our full analysis report here, it’s free for active Edge members.
- Hardware & Infrastructure company NetApp (NASDAQ:NTAP) fell 5.6%. Is now the time to buy NetApp? Access our full analysis report here, it’s free for active Edge members.
- Electronic Components & Manufacturing company Plexus (NASDAQ:PLXS) fell 3.7%. Is now the time to buy Plexus? Access our full analysis report here, it’s free for active Edge members.
- Satellite Telecommunication Services company Globalstar (NASDAQ:GSAT) fell 5%. Is now the time to buy Globalstar? Access our full analysis report here, it’s free for active Edge members.
- IT Services & Consulting company EPAM (NYSE:EPAM) fell 4.1%. Is now the time to buy EPAM? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Coherent (COHR)
Coherent’s shares are extremely volatile and have had 41 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 17 days ago when the stock dropped 5.6% on the news that Federal Reserve Chair Jerome Powell delivered cautious remarks on the economy, spooking investors and pulling indexes back from record highs. Speaking for the first time since the central bank's recent interest rate cut, Powell described the current economic landscape as a "challenging situation." He highlighted the difficult task of balancing a weakening labor market against persistent inflation risks. Powell also commented that equity prices appeared "fairly highly valued," adding to investor concerns and prompting profit-taking. The cautious tone from the Fed chair drove declines across major indexes, including the S&P 500 and the tech-heavy Nasdaq, as the market reassessed the path forward for monetary policy.
Coherent is up 12.2% since the beginning of the year, and at $112.88 per share, it is trading close to its 52-week high of $122.35 from October 2025. Investors who bought $1,000 worth of Coherent’s shares 5 years ago would now be looking at an investment worth $2,499.
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