Shares of numerous tech stocks got clobbered today amid a broad market sell-off that hit the sector particularly hard. Over the weekend, Vice President Mike Pence said that the U.S. would not back down from its trade war with China, and it could even potentially double tariffs.
"The United States, though, will not change course until China changes its ways," Pence said at the Asia Pacific Economic Cooperation (APEC) summit. The Trump administration has already imposed tariffs on $250 billion worth of goods imported from China. Pence's comments contradicted those made by President Trump last week, when Trump said he may not impose more tariffs anytime soon.
Here are some stocks that sold off today:
- salesforce.com (NYSE:CRM): down 9%
- Atlassian (NASDAQ:TEAM): down 9%
- Varonis Systems (NASDAQ:VRNS): down 10%
- Tableau Software (NYSE:DATA): down 10%
- CyberArk Software (NASDAQ:CYBR): down 10%
- New Relic (NYSE:NEWR): down 10%
Generally speaking, many tech companies have their supply chains concentrated in China, exposing them to greater potential risk from the escalating trade tensions. That may not necessarily apply to the enterprise software and cybersecurity companies listed above, but many of those companies are either unprofitable or trade at lofty earnings multiples, making them especially vulnerable to volatile swings as investors move toward less-risky assets. The broader tech sector was under heavy pressure today, with the tech-heavy Nasdaq Composite falling 3%, much worse than the S&P 500's 1.7% decline.
Apple (NASDAQ:AAPL) also contributed to the negative sentiment, following a report in The Wall Street Journal that the company was cutting production orders of its newest iPhones. A separate report in the Journal regarding Facebook (NASDAQ:FB) alleged that CEO Mark Zuckerberg was pinning much of the blame around recent controversies on COO Sheryl Sandberg. Shares of the social networking giant are trading at 52-week lows.
Tech had been flying high this year before October, stretching earnings multiples despite concerns around slowing growth at some of the biggest tech giants. Markets have been especially volatile since the beginning of October, and that volatility may continue through year end as continued uncertainty regarding tariffs weighs on investor sentiment.