The stock market faced another day of significant selloffs. There were selling pressure across the board which saw the S&P 500 dropped by 2.24%, NASDAQ also fell by 3.07% while DJIA decreased by 1.73%.
There were two significant impact which contributed to the selloff with negative market sentiment.
NVIDIA and AMD Announcement Catalyse Market Selloff
$NVIDIA(NVDA)$ announced it expects first-quarter results to include up to $5.5 billion in charges related to H20 products due to export restrictions to China. AMD (AMD) also projected an $800 million impact. These announcements further catalyse the selling pressure which lead to negative market sentiment.
Fed Comment Add To Selling Pressure
Federal Reserve Chair Jerome Powell's recent remarks have heightened worries about the economic impact of tariffs, this also accelerated the selloff, as he indicated no expected progress on the Fed's dual mandate goals this year and dismissed the idea of a "Fed put."
The economic impact of tariffs as suggested by Fed Chair could lead to a temporary rise in inflation. The tariffs might strain the Fed's dual mandate of stable prices and strong employment, potentially leading to stagflation.
With Fed Chair comments, we saw more pressure on the already weak market and impact the technology and semiconductor stocks. Enterprise software stocks like Microsoft (MSFT), Oracle (ORCL), and Adobe (ADBE) also saw declines. These stocks, along with cybersecurity firms like Fortinet (FTNT) and CrowdStrike (CRWD), faced downward pressure amid the broader market volatility.
March Retail Sales Inflated By Pre-Tariff Buying
Even though we saw strong retail sales increase but there is still concerns raised as this March’s data might be the result of pre-tariff buying activity which could potentially lead to declines in the future.
The total retail sales came in slightly above the 1.3% consensus, as compared to February’s figure increase of 0.2%, March was 1.4% marking significant increase. Excluding autos, retail sales rose by 0.5% month-over-month, exceeding the 0.2% consensus figure while lower than the revised February’s figure of 0.7% from 0.3%.
Other economic data, saw a decline in industrial production which was primarily due to a significant drop in utilities output, overshadowing gains in manufacturing and mining.
Weekly MBA Mortgage Applications Index came in at -8.5% while the previous was 20.0%. March Industrial Production was -0.3% compared to consensus at -0.3% while previous was revised to 0.8% from 0.7%.
March Capacity Utilization was 77.8% compared to consensus at 77.9% while previous was 78.2%. February Business Inventories was 0.2% compared to consensus at 0.3% while the previous was 0.3%.
April NAHB Housing Market Index came in higher at 40 with consensus at 39 while previous was 39.
S&P 500 Technology Sector Biggest Lagger
The technology sector further suffered as the Nasdaq-100 index (NDX) plunged 4.1%, driven by the downturn in semiconductor stocks and Powell's hawkish comments. Nvidia's disclosure regarding the need for special licenses to export its GPUs to China contributed to the negative sentiment, causing the Philadelphia Semiconductor Index (SOX) to drop by 6.9%.
Mega caps and semiconductor stocks led declines amid tariff-related uncertainties and growth concerns. The $Vanguard Mega Cap Growth ETF(MGK)$ fell 3.3%, and the $Philadelphia Semiconductor Index(SOX)$ dropped 4.1%. The technology sector saw the largest decline, down 3.9%, followed by consumer discretionary (-2.7%) and communication services (-2.5%).
Stocks To Watch
Nvidia (NVDA) and Advanced Micro Devices (AMD) faced significant setbacks as the U.S. government imposed new export licensing requirements on their AI chips, part of a broader strategy to curb China's AI ambitions. Both companies saw their shares fall by 7% amid these developments, with Nvidia warning of a $5.5 billion hit to its quarterly results and AMD anticipating an $800 million impact.
$Costco(COST)$ announced a 12.1% increase in its quarterly dividend to $1.30 per share, payable on May 16. This move comes amid ongoing tariff risks, which have been a concern for retailers. Despite the challenges, Costco continues to show strong financial performance.
As part of defensive stock strategy for interest rate inflation and now tariffs, COST has shown strong financial performance and the technical have shown promising potential.
RSI has shown momentum building up and investors sentiment are coming back for COST and it have traded above the 12-EMA and 26-EMA, which shows that the bulls are back in control, and now I believe the bulls might attempt for a daily uptrend expansions.
If that happened, we could see a further upside as the tariffs might continue while negotiation could potentially prolonged.
I would be planning to add position to COST if the bullish signal become clearer.
Ford (F) indicated that it might need to increase vehicle prices next month due to rising costs from tariffs on non-USMCA parts and vehicles. Although Ford has a lower exposure to U.S. trade policy compared to its Detroit counterparts, potential changes in "U.S. content" definitions could impact its pricing strategy significantly.
Meta Platforms (META) is currently engaged in a legal battle with the FTC over its acquisitions of Instagram and WhatsApp. The outcome could force Meta to divest one or both platforms, though analysts suggest the company could survive without them, focusing more on new initiatives.
Palantir Technologies (PLTR) saw its stock fall over 6.5% following Powell's warnings about tariffs. The company also announced a partnership with Citigroup (C) to enhance data utilization, aiming to improve client experiences and operational processes.
In the MedTech space, $Abbott Laboratories(ABT)$ and Baxter (BAX) are expected to be less affected by new tariffs compared to Johnson & Johnson (JNJ) and Medtronic (MDT), which face higher exposure due to their reliance on overseas manufacturing.
If we looked at how ABT has show that it is less affected by new tariffs on the pharma, we are seeing momentum picking up on the RSI but share price is still trading sideways.
We need to see that the bulls are back in control and provide a clearer daily uptrend, and we could also see some surprise upside move on ABT if the new tariffs on pharma become clearer.
Summary
I think the market might continue the selling pressure today (17 April) before the holiday, there would be more impact on other technology stocks, especially the companies who needed the chips for their operations.
The prolonged negotiation between U.S. and China would add more woes to the market, so next week we might need to be more cautious of heightened tariff concerns.
Appreciate if you could share your thoughts in the comment section whether you think selling pressure would continue with heightened tariff concerns.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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