Apple (AAPL ) halted market growth on Tuesday after issuing an investor update stating that the tech company's quarterly guidance will not be met due to the ongoing coronavirus. The company cited that worldwide iPhone supply has been constrained and demand in China being affected as the two main factors behind the company's predicted loss of revenue. However, Apple has stated that their product demand outside of China is still in line with expectations.
But the damage was done. Semiconductors took the largest hit, especially companies like Broadcom (AVGO ), Qorvo (QRVO ) and Skyworks Solutions (SWKS ), all of whom create much of the hardware for Apple products. Semiconductors ETFs had performance gains early in the week, mainly due to Nvidia (NVDA ) boosting earnings and factors like the growth of cloud companies, 5G, and new video game consoles issued to release from big players signaling an upcoming rally.
Another threat to a semiconductor rally is coming from the Trump Administration, for the U.S. Commerce Department is reportedly drafting a new trade restriction that would limit China's use of American semiconductor equipment. The Wall Street Journal reported that the new ruling will restrict foreign companies use of U.S. tech for military or national-security products and would require chip factories to get licenses if they intend to use American equipment to manufacture chips for Huawei products.
Relevant Chip ETFs: Direxion Daily Semiconductor Bull 3X Shares (SOXL ), VanEck Vectors Semiconductor ETF (SMH ), iShares PHLX Semiconductor ETF (SOXX ), ProShares Ultra Semiconductors (USD ), Direxion Daily Semiconductor Bear 3X Shares (SOXS ), SPDR S&P Semiconductors (XSD ), Invesco Dynamic Semiconductors ETF (PSI ), First Trust Nasdaq Semiconductor ETF (FTXL ), ProShares UltraShort Semiconductors (SSG ), and SPDR S&P Technology hardware ETF (XTH ).
Other ETFs in Focus:
KraneShares CSI China Internet ETF (KWEB ) and iShares China Large-Cap ETF (FXI ) are both slumping due to the coronavirus affecting Chinese companies like Alibaba (BABA ). Though iShares has recorded negative growth for its year-to-date, KraneShares is still gaining for the year.
Procure Space ETF (UFO ) has seen some explosive growth this week on the back of Virgin Galactic's (SPCE ) recent rally. Other holdings in this ETF include Maxar Technologies (MAXR ), Iridium Communications (IRDM ) and Dish Network (DISH ), giving investors broad expose to the overall space market.