Tech investors need to brace for this pivotal $160 billion ‘gut punch’ in December, says analyst Dan Ives

(MarketWatch) As unnerving as the trade-war has been for investors lately, some volatile sessions are at least keeping investors on their toes as investors head toward earnings season.

Equities are set to whipsaw higher Wednesday, a day after a 300-point tumble for the Dow fueled by trade worries. Early Wednesday, futures were climbing on talk China may go for a partial trade deal. Some are also crediting Tuesday’s pledge by Federal Reserve Chairman Jerome Powell to resume purchases of short-term Treasury bonds for the cheerier mood. 

If the U.S. and China can work past some big differences at talks that start Thursday, that wouldn’t go unwelcome for one big sector — tech stocks. That is as our call of the day warns investors to mark their calendar for a “pivotal $160 billion” crucial moment ahead for the tech space.

“The biggest worry looming remains the December 15 tariff deadline which would be a potential ‘gut punch’ if this tariff is not removed or kicked further down the road by the Trump administration given its negative consequences for semi [conductor] players and the broader tech space with Apple remaining the poster child for these trade worries given its Foxconn flagship iPhone,” explains Daniel Ives and Strecker Backe, analysts at Wedbush, in a note to clients. 

The backdrop: The U.S. is set to impose a second round of 15% tariffs on $160 billion of Chinese imports by mid December, affecting virtually all goods imported from that nation. In September, Apple and other companies in that space got a reprieve after the U.S. exempted cellphones, laptops and other electronic goods from a September round of tariffs.

But the hourglass is running down on that one, and headed into third-quarter earnings, China remains the biggest black cloud for the tech sector, Wedbush analysts warn.

“Tech stocks are ultimately caught in the crossfire with Apple and the semi space remaining front and center as the Street is carefully watching how tech vendors are dealing with the current trade tensions,” said the analysts.


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