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:
- Hardware & Infrastructure company Hewlett Packard Enterprise (NYSE:HPE) fell 4.9%. Is now the time to buy Hewlett Packard Enterprise? Access our full analysis report here, it’s free for active Edge members.
- Professional Staffing & HR Solutions company Robert Half (NYSE:RHI) fell 4.5%. Is now the time to buy Robert Half? Access our full analysis report here, it’s free for active Edge members.
- Digital Media & Content Platforms company Rumble (NASDAQ:RUM) fell 3.8%. Is now the time to buy Rumble? Access our full analysis report here, it’s free for active Edge members.
- Advertising & Marketing Services company QuinStreet (NASDAQ:QNST) fell 5.4%. Is now the time to buy QuinStreet? Access our full analysis report here, it’s free for active Edge members.
- Digital Media & Content Platforms company Ziff Davis (NASDAQ:ZD) fell 7.5%. Is now the time to buy Ziff Davis? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Ziff Davis (ZD)
Ziff Davis’s shares are quite volatile and have had 17 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 3 days ago when the stock dropped 2.9% as broader macroeconomic concerns, including an ongoing government shutdown and anticipation of commentary from Federal Reserve officials, began to weigh on investor sentiment. After reaching new record highs, major U.S. indices like the S&P 500 and Nasdaq experienced a slight retreat. This pause came as investors grappled with the potential economic impact of a partial government shutdown, which had dampened consumer confidence and delayed the release of key economic data, such as September's nonfarm payrolls. The market appeared to be in a holding pattern as traders anticipated signals from Federal Reserve officials, looking for clues on future monetary policy. The caution in the broader market suggests that wider economic anxieties are currently overriding recent sector-specific optimism.
Ziff Davis is down 36.1% since the beginning of the year, and at $35 per share, it is trading 41.7% below its 52-week high of $59.99 from December 2024. Investors who bought $1,000 worth of Ziff Davis’s shares 5 years ago would now be looking at an investment worth $478.99.
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