What Happened?
A number of stocks fell in the afternoon session after renewed worries over worsening trade relations with China were triggered by critical comments from the U.S. President.
The remarks specifically targeted China's tightening control over rare earth metals, which are crucial components in a wide range of technology products, including defense systems and electric vehicles. The tone and the suggestion that a key diplomatic meeting might be canceled sparked a rapid sell-off in the market. Consequently, technology stocks with significant exposure to Chinese supply chains experienced sharp declines as investors weighed the potential impact of escalating trade disputes.
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:
- Electronic Components & Manufacturing company CTS (NYSE: CTS) fell 2.7%. Is now the time to buy CTS? Access our full analysis report here, it’s free for active Edge members.
- IT Distribution & Solutions company ePlus (NASDAQ: PLUS) fell 3.2%. Is now the time to buy ePlus? Access our full analysis report here, it’s free for active Edge members.
Zooming In On ePlus (PLUS)
ePlus’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock dropped 3.3% on the news that Federal Reserve Chair Jerome Powell delivered cautious remarks on the economy, spooking investors and pulling indexes back from record highs.
Speaking for the first time since the central bank's recent interest rate cut, Powell described the current economic landscape as a "challenging situation." He highlighted the difficult task of balancing a weakening labor market against persistent inflation risks. Powell also commented that equity prices appeared "fairly highly valued," adding to investor concerns and prompting profit-taking. The cautious tone from the Fed chair drove declines across major indexes, including the S&P 500 and the tech-heavy Nasdaq, as the market reassessed the path forward for monetary policy.
ePlus is down 5.9% since the beginning of the year, and at $69.67 per share, it is trading 31.5% below its 52-week high of $101.67 from October 2024. Investors who bought $1,000 worth of ePlus’s shares 5 years ago would now be looking at an investment worth $1,789.
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