Reports that the Trump administration is planning additional curbs on Chinese trade and investment with in U.S. sent the entire stock market tumbling, but tech stocks were hit particularly hard.
At midday, shares of Facebook were down 4%, Google parent Alphabet had lost 3%, Netflix was down 7%, and Amazon was down 3%. Among chipmakers, which would could be most affected by the rumored crackdown, Qualcomm was down 3%, Intel has lost 4%, Nvidia dropped 5%, and Advanced Micro Devices lost 6%.
In the overall market, the S&P 500 index was down almost 2% and the Nasdaq was off close to 3%.
The hard drop came after the Wall Street Journal reported that the administration wants to create “enhanced” export controls that would bar some U.S. technologies from being shipped to China and ban many Chinese companies from buying U.S. tech companies. Bloomberg reported that the investment limits would affect fields such as electric vehicles, robotics and aerospace.
Treasury Secretary Steven Mnuchin tweeted that the reports were “fake news,” but that didn’t turn the stock around.
Not all of the tech companies would affected by such policies, however. Chipmakers, which make large sales to Chinese device makers and own or employ fabrication facilities in China could be deeply hurt. “Blocking technology exports could be harmful and negatively impact many U.S.-based chipmakers,” analyst Angelo Zino of CFRA Research wrote in a report on Monday. The 10 largest chipmakers by stock market value generate about 37% of their sales from China, Zino added.
But Google does little business in China currently and Netflix has also avoided the country. Thus, some investors may simply be positioning for an unsettled global economy by moving out of the more volatile tech sector and into bonds or safer equities. Shares of consumer brands like Clorox (clx) and J.M. Smucker (sjm) were up 2% each, for example.
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Still, Monday’s weakness follows a strong run for tech stocks overall. Even after falling on Monday, for example, Facebook (fb) remains up 25% over the past year, Google 14% (googl), Amazon 65% (amzn), and Netflix 143% (nflx) versus about a 13% gain in the S&P 500 Index. Intel (intc) has gained 51% over the past year, Nvidia (nvda) 55%, and AMD (amd) 5%.