The losses continue to rack up for the Dow Jones Industrial Average as it reached a 405-point loss before Monday noon Eastern Time with semiconductor ETFs also taking a hit as trade concerns turn their attention to the technology sector.
The U.S.-China trade tensions went up another notch as U.S. President Donald Trump purportedly threatened to restrict Chinese investments in U.S. technology companies. In turn, the NASDAQ opened in the red for the third time, dropping over 150 points with semiconductor companies like Intel and Micron taking the brunt of the market punishment unleashed on the tech sector.
Related: Dow Slides 300 Points as Trade Tensions Ramp Up
As such, semiconductor ETFs responded negatively with iShares PHLX Semiconductor ETF (NASDAQ: SOXX) down 3.86%, VanEck Vectors Semiconductor ETF (NYSEArca: SMH) down 3.98%, and Direxion Daily Semicondct Bull 3X ETF (NYSEArca: SOXL) down big at 11.59%.
Chris Caso, Raymond James managing director and analyst, was flummoxed by the trade concerns affecting the chipmaking industry as a whole.
“In terms of how it plays out, I think it’s incredibly difficult to figure this out,” said Caso. “Every single day, a different piece of news is moving in a different direction.”
Nonetheless, Caso cites the market fundamentals of the semiconductor industry as strong despite the trade tension news.
“From what I hear from my (semiconductor) companies, they sound very good right now,” said Caso. “Usually from a fundamental standpoint, the semis are usually a leader with regard to the business cycle.”
Related: Technology ETFs Lead The Charge in 2018
Treasury Secretary Cites Fake News
With much of the blame resting squarely on U.S. President Donald Trump’s shoulders for precipitating the fall in the technology sector today, Treasury Secretary Steven Mnuchin was quick to parry the blame. On Sunday, the Wall Street Journal reported that the Treasury Department is in the process of creating rules that will block companies with at least a 25 percent Chinese ownership stake from buying companies that participate in creating “industrially significant technology.”
Mnuchin dismissed the report as fake news.
On behalf of @realDonaldTrump, the stories on investment restrictions in Bloomberg & WSJ are false, fake news. The leaker either doesn’t exist or know the subject very well. Statement will be out not specific to China, but to all countries that are trying to steal our technology.
— Steven Mnuchin (@stevenmnuchin1) June 25, 2018
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