What Happened?

A number of stocks fell in the afternoon session after the U.S. threatened to impose "massive increases" to tariffs on China in response to new export controls from Beijing. 

The potential countermeasures follow China's decision to place new restrictions on the export of strategic minerals and related products, including rare earths, which are critical for the defense, semiconductor, and manufacturing industries. This escalation in the economic competition between the two largest global economies is fueling investor anxiety. The new tariff threats raise concerns about disruptions to global supply chains, increased material costs for manufacturers, and a potential drag on an already sluggish economy. Industrial companies are particularly sensitive to these developments as they are often cyclical and heavily reliant on international trade.

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:

• Renewable Energy company Fluence Energy (NASDAQ: FLNC) fell 8.2%. Is now the time to buy Fluence Energy? Access our full analysis report here, it’s free for active Edge members.
• Ground Transportation company Heartland Express (NASDAQ: HTLD) fell 6%. Is now the time to buy Heartland Express? Access our full analysis report here, it’s free for active Edge members.
• Renewable Energy company ChargePoint (NYSE: CHPT) fell 5.1%. Is now the time to buy ChargePoint? Access our full analysis report here, it’s free for active Edge members.
• Automobile Manufacturing company Winnebago (NYSE: WGO) fell 4.3%. Is now the time to buy Winnebago? Access our full analysis report here, it’s free for active Edge members.
• Electronic Components company Vishay Precision (NYSE: VPG) fell 3.9%. Is now the time to buy Vishay Precision? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Fluence Energy (FLNC)

Fluence Energy’s shares are extremely volatile and have had 78 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 3 days ago when the stock dropped 8.7% on the news that investors grew anxious as the U.S. government shutdown extended into its seventh day, creating widespread uncertainty. 

The political stalemate in Washington has tangible consequences for the economy and markets. A key impact is the delay in the release of crucial economic data, including the September jobs report, leaving the Federal Reserve with less information to guide its policy decisions. The shutdown is also causing direct disruptions, with staffing shortages at the Federal Aviation Administration (FAA) leading to widespread delays at major airports. This combination of economic ambiguity and real-world service interruptions has dampened investor confidence across multiple sectors. 

Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position. Also, the latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations are rising, while their outlook on the labor market is deteriorating. Consumers expressed greater concern about potential job losses and expect lower earnings growth, factors that directly impact discretionary spending.

Fluence Energy is down 19% since the beginning of the year, and at $13.70 per share, it is trading 41.7% below its 52-week high of $23.50 from November 2024. Investors who bought $1,000 worth of Fluence Energy’s shares at the IPO in October 2021 would now be looking at an investment worth $391.43.

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