NEW YORK — Looking across the stock market, it’s hard to find a company that isn’t vulnerable in some degree to the U.S.-China trade war.
Stocks of companies that do lots of business with China, such as chipmakers and other technology companies, are obvious candidates for investors to sell when trade worries rise. They have fallen more than the rest of the market whenever President Donald Trump sends out a tweet or speaks about tariffs.
But investors are also looking beyond these first-order effects as they pick out which stocks look susceptible to the trade war. Those picks now include many companies that have no significant ties to China but are still at risk.
That’s why all but 2% of the stocks in the S&P 500 fell on Aug. 5, when worries ratcheted higher after China let its currency devalue to its lowest level in a decade.
The damage has been widespread since Trump shocked investors on Aug. 1 by saying he planned soon to extend tariffs across virtually all Chinese imports.
The latest tariffs cover about $300 million of Chinese goods, many of them consumer products that were exempt from early rounds of taxes.
Among the losers in the dispute:
Energy companies
Energy stocks in the S&P 500 have plunged 10.2% since just before Trump sent his Aug. 1 tweet, the worst decline of the 11 sectors that make up the index.
National Oilwell Varco, for example, is based in Houston and gets most of its revenue from supplying drilling and other technologies in the United States, Saudi Arabia, Brazil and Norway. But its stock has plunged nearly 22%, seven times the loss of the overall S&P 500.
That’s in large part because the price of oil has sunk on worries that the trade war will do lasting damage to the global economy. If that happens, countries around the world will have less need to burn oil. The price of benchmark U.S. crude plunged nearly 8% on Aug. 1, its worst day in 4 1/2 years.
Banks
Financial stocks have been the second-worst performing sector in the S&P 500 in recent weeks as the prospect of less-profitable lending threatens banks’ profits.
Comerica, for instance, has been sucked into an industrywide downdraft. It is based in Dallas and has bank branches mostly in Arizona, California, Florida, Texas and Michigan. It has some businesses operating outside the country, but in Canada and Mexico, not China. Its stock has sunk 16.2% during the recent pick-up in trade tensions.
The escalation in the trade war has led a growing number of economists and analysts to warn about a possible recession. And those concerns have spread to the bond market, where interest rates have sunk sharply.
The market for interest rates has gone so haywire this month because of worries about a possible recession that long-term Treasury yields in some cases are lower than short-term yields. That’s trouble for an industry that relies on borrowing money at short-term rates, lending it out at long-term rates and pocketing the difference.
Microchip companies
Companies that make microchips that go into laptops and other electronics have been some of the trade war’s biggest victims because of how dependent they are on China.
Consider Micron Technology, which got more than 57% of all its sales from China in its last fiscal year. Not only that, it needs China for rare earth minerals found there, and it also has significant manufacturing operations in the country.
Micron sank 2.9% on Aug. 1, when Trump announced he would extend tariffs to products that include laptops and mobile phones. That was more than triple the S&P 500’s loss.
Since Trump’s 2018 tweet that “trade wars are good, and easy to win,” Micron is down 8.5%, while the S&P 500 is up 7.9%.
