The Dow Jones Industrial Average declined by 84.1 points to 25,679.90 as Apple lagged. The 30-stock index dropped as much as 203 points earlier in the day. The S&P 500 pulled back 0.7% to 2,840.23, with the tech sector dropping 1.8%. The Nasdaq Composite lagged, dropping 1.46% to 7,702.38.
Alphabet’s Google has suspended business with Huawei that involves transferring hardware, software and other technical services. The U.S. search giant’s decision follows President Donald Trump’s administration adding Huawei to a list that required U.S. companies get a license to do business with the Chinese company. Bloomberg News also reported that companies like Intel, Qualcomm and Broadcom will not supply Huawei until further notice.
“If this remains enforced, it’s going to create some opportunity, but clearly companies are working with their compliance departments to get out of the way of this Huawei situation,” said Quincy Krosby, chief market strategist at Prudential Financial. That’s difficult because “Huawei has its tentacles in so many parts of technology sector. That’s why this is not a one-day event.”
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Apple added to the market’s decline, sliding more than 3% after an HSBC analyst cut its price target on the tech giant. The analyst cited worries over the ongoing trade war for the target cut.
The moves by the U.S. government and tech companies come as China and the U.S. try to strike a deal that would end the countries’ ongoing trade war. The U.S. hiked tariffs on $200 billion worth of Chinese goods earlier this month, and China retaliated by raising levies on $60 billion worth of U.S. imports.
CNBC reported on Friday that U.S.-China trade talks have stalled. Sources told CNBC’s Kayla Tausche that scheduling discussions had not happened as the U.S. increases pressure on Chinese telecom companies. Meanwhile, the South China Morning Post said that China was in no rush to continue trade talks.
Trade fears have hit stocks hard this month. The S&P 500 is down 3.6% for May while the Dow and Nasdaq have lost 3.4% and 4.95, respectively.
“A trade war would hammer U.S. and global growth, with obvious implications for asset allocation, equity sectors and the dollar,” said Chen Zhao, chief global strategist at Alpine Macro, in a note. “But that outcome is plastered all over the headlines. Forgotten is that there are also upside risks for the U.S. economy.”