Friday wasn't a good day on Wall Street, as early gains evaporated on trade-related concerns. New animosity between the U.S. and China showed up in ideas that Washington is now considering, and there doesn't appear to be any favorable resolution likely in the near future. Some stocks saw much larger losses than the broader market. Applied Materials (AMAT -2.79%), Alibaba Group Holding (BABA 0.09%), and Jefferies Financial Group (JEF 0.80%) were among the worst performers. Here's why they did so poorly.
Semiconductor weakness chips away at Applied Materials
Shares of Applied Materials fell 5% on a bad day for the semiconductor industry. Most of the attention among tech investors was squarely on Micron Technology, which said that average selling prices for its key memory chips continued to fall sharply over the past several months. That's bad news for Applied Materials, because it makes much of the equipment that semiconductor companies use to manufacture their chips. If the chip market remains weak, then the industry won't buy as much Applied Materials equipment, and that could last for the full duration of the cyclical downturn in semiconductors.
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Alibaba investors fear U.S. de-listing
Chinese internet giant Alibaba Group Holding saw its shares drop 5%, leading most of its peers lower as well. The Trump administration is reportedly looking at whether it can fight back in its trade dispute with China by limiting capital flows between the two countries, and one of those possible solutions could include requiring U.S. exchanges to de-list Chinese companies like Alibaba. Government pension funds might also be required to divest their interests in Alibaba and other stocks in China. At this point, it's unclear how serious these discussions are, but investors sold off nearly every Chinese stock regardless of their fundamental prospects.
Jefferies finishes spinoff
Finally, shares of Jefferies Financial Group finished about 9% below where they closed Thursday. Much of the decline was tied to the company's spinoff of its stake in Spectrum Brands Holdings, whereby Jefferies shareholders received 0.025 shares of Spectrum for each share of Jefferies stock they own. The move continues to concentrate Jefferies' future attention on its financial business, but it represents a nice windfall for investors as well. Jefferies also reported its quarterly earnings late Thursday, which included significant declines in both revenue and net income. If the global economy enters into a recession, it could be even harder for Jefferies to stay positive going forward.