With the weekend approaching and the broad market’s current valuation still mostly unjustified, investors collectively decided today would be as good of a day as any to kick-start the usual September weakness. Fanning those bearish flames was political unrest stemming from combative posturing by North Korea. By the time Friday’s closing bell rang, the S&P 500 was at 2127.81, down 2.45%.
It could have been worse. You could have owned Momo Inc (ADR) (NASDAQ:MOMO), Skyworks Solutions Inc (NASDAQ:SWKS) and Vale SA (ADR) (NYSE:VALE). Those three names led the bearish charge.
Here’s why.
Vale SA (ADR) (VALE)
Not that it didn’t make for any easy target anyway, but Brazilian iron ore miner Vale SA saw its stock plunge more than 6% on Friday after commodity prices tanked.
Persistently low commodity prices — and metal prices in particular — have been working against Vale since 2014. The global economy has seen glimmers of hope that we may finally be climbing out of that rut, but the market collectively decided today was the day to sell … everything.
Gold was down 0.5%, while crude oil tumbled 3.3%. Vale, already struggling with a recession in Brazil in addition to tepid global demand for metals, was one of traders’ first and biggest targets.
Skyworks Solutions Inc (SWKS)
To be fair, the broad market’s implosion on Friday, as is often the case, put more aggressive technology stocks at the top of the “to sell” list. But Skyworks Solutions got an extra bearish bump thanks to some bad news from Samsung Electronics (OTCMKTS:SSNLF) … the Galaxy Note 7 is being recalled, as its batteries are at risk of exploding.
It’s not exactly news; the company announced the recall a few days ago. But, investors are starting to connect the dots, realizing that the Galaxy 7 gaffe (and it was already a bit of a flop) could impact Skyworks Solutions, as Skyworks Solutions is one of the key component suppliers for the device.
SWKS ended the day down 6.5%.
Momo Inc (ADR) (MOMO)
Last but not least, several tech stocks from the far east got hit hard today, including Weibo Corp (ADR) (NASDAQ:WB) and SINA Corp (NASDAQ:SINA). Among the hardest hit, however, was Momo. It fell nearly 12% on Friday.
Part of the pullback was driven by the broad selloff of the technology sector’s stocks. Part of the pullback from MOMO, however, was also spurred by reports that North Korea had detonated another nuclear bomb as part of a weapons development effort. Momo, based only 900 miles away in Beijing, is at heightened risk should political tensions between North Korea and neighboring nations escalate.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
