What Happened?

A number of stocks fell in the afternoon session after President Donald Trump threatened to impose 'massive' new tariffs on Chinese goods. 

President Donald Trump's threat of "massive" new tariffs on Chinese goods sent shockwaves through the market, directly impacting chipmakers like Nvidia and AMD. Trump noted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. Compounding the pressure, Beijing has reportedly initiated its own countermeasures. These include tightening export controls on crucial raw materials such as rare earths and launching an antimonopoly investigation into chip giant Qualcomm. 

Furthermore, reports indicate that Chinese customs officials are now conducting stringent checks on semiconductor shipments arriving at ports, specifically targeting certain high-end chips. This escalating back-and-forth creates significant uncertainty for the semiconductor industry, which relies heavily on complex global supply chains and access to international markets, leading to a broad sell-off across the sector.

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:

• Analog Semiconductors company Impinj (NASDAQ: PI) fell 8.2%. Is now the time to buy Impinj? Access our full analysis report here, it’s free for active Edge members.
• Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) fell 4.5%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free for active Edge members.
• Analog Semiconductors company Power Integrations (NASDAQ: POWI) fell 5.9%. Is now the time to buy Power Integrations? Access our full analysis report here, it’s free for active Edge members.
• Semiconductor Manufacturing company Teradyne (NASDAQ: TER) fell 6.1%. Is now the time to buy Teradyne? Access our full analysis report here, it’s free for active Edge members.
• Semiconductor Manufacturing company Entegris (NASDAQ: ENTG) fell 6.6%. Is now the time to buy Entegris? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Impinj (PI)

Impinj’s shares are very volatile and have had 29 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 about 21 hours ago when the stock dropped 3.3% on the news that 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 view 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. The new policies are expected to tighten global supply chains, potentially causing licensing delays and cost increases for manufacturers in key strategic sectors. 

Also, investors paused a record-setting rally amid uncertainty from the ongoing U.S. government shutdown. The S&P 500 and Nasdaq pulled back from all-time highs as the shutdown entered its second week, creating a data vacuum for investors. The political impasse has halted the release of vital economic indicators, including key reports on jobs and inflation. Without this crucial information, it becomes more difficult for the Federal Reserve and market participants to accurately assess the nation's economic health. This uncertainty has prompted traders to take profits following a prolonged period of gains. In the absence of official data, investors are paying close attention to upcoming speeches from Fed officials for any guidance on future monetary policy. 

In addition, Jamie Dimon raised concerns about a market correction. He added, "I would give it a higher probability than I think is probably priced in the market and by others, so if the market is pricing in 10%, I would ... say it's more like 30%." Dimon's remarks are closely watched, given his influence as head of one of the nation's largest banks.

Impinj is up 27.4% since the beginning of the year, but at $187.03 per share, it is still trading 21.6% below its 52-week high of $238.58 from October 2024. Investors who bought $1,000 worth of Impinj’s shares 5 years ago would now be looking at an investment worth $6,080.

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