What Happened?
A number of stocks fell in the afternoon session after markets gave up early gains with optimism over progress in US-China trade talks quickly fading as the Trump administration announced plans to raise tariffs on all Chinese imports to well above 100%.
Hopes had been lifted by chatter of constructive negotiations aimed at easing and eventually removing U.S. trade tariffs. But the news confirmed fears of a prolonged trade fight, increasing uncertainty about the direction of economic policy. This left investors grappling with the dual threat of slower growth and higher inflation, both of which could linger if the standoff continues.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, following stocks were impacted:
- Online Marketplace company Etsy (NASDAQ: ETSY) fell 5.5%. Is now the time to buy Etsy? Access our full analysis report here, it’s free.
- Social Networking company Snap (NYSE: SNAP) fell 7.1%. Is now the time to buy Snap? Access our full analysis report here, it’s free.
- Gig Economy company Lyft (NASDAQ: LYFT) fell 5%. Is now the time to buy Lyft? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Intel (NASDAQ: INTC) fell 6.7%. Is now the time to buy Intel? Access our full analysis report here, it’s free.
- Large-format Grocery & General Merchandise Retailer company Target (NYSE: TGT) fell 5.8%. Is now the time to buy Target? Access our full analysis report here, it’s free.
Zooming In On Snap (SNAP)
Snap’s shares are very volatile and have had 25 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 20 days ago when the stock gained 5.5% on the news that stocks rebounded to start the session amid continued market volatility and moved slightly higher after the Federal Open Market Committee kept rates at 4.25% to 4.50% in its March 2025 meeting. The Jerome Powell-led committee also hinted at two more rate cuts for the year, saying, "Uncertainty around the economy has grown."
The good news was that holding rates steady and signaling two additional cuts this year meant no surprises (the market dislikes surprises). The bad news was that the Fed reduced its outlook for growth to 1.7%, down from the previous projection of 2.1% in December. At the same time, the inflation outlook was raised to a 2.8% annual increase for core prices, up from the prior projection of 2.5%. This suggested the Fed saw the macro tilting towards a stagflation scenario, where inflation rises as economic growth slows.
Snap is down 35.5% since the beginning of the year, and at $7.25 per share, it is trading 57.7% below its 52-week high of $17.14 from May 2024. Investors who bought $1,000 worth of Snap’s shares 5 years ago would now be looking at an investment worth $548.40.
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