Stocks fell as the impact of the White House’s decision to blacklist Huawei rippled through markets Monday.
In another escalation of the trade war between the U.S. and China, the U.S. put Huawei and 26 of its affiliates on an export blacklist last week that went into effect on Friday. “This action stems from information available to the Department that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest,” The Commerce Department said in a statement .
The U.S. has long considered Huawei a national security risk and has been suspicious that the Chinese tech company was committing espionage on behalf of the Chinese government. However, because Huawei conducts business with American tech companies, the Trump Administration’s move to cut off the world’s second largest smartphone maker is also ending shockwaves through the U.S. tech industry.
Tech giant Alphabet ( GOOGL ) has reportedly halted most business with Huawei, according to Reuters . Shares of the tech ETF, XLK , tumbled nearly 2%, as Alphabet, Facebook ( FB ), Amazon ( AMZN ) took big hits.
In addition, chipmakers Qualcomm ( QCOM ), Broadcom ( AVGO ) and Intel ( INTC ) reportedly told their employees that they will be halting business with Huawei until further notice. Huawei is heavily reliant on American microchips and the suspension of shipments could have crippling effect for Huawei. Shares of Qualcomm and Broadcom plunged 6%, while Intel tumbled nearly 3%. The ETF tracking semiconductors, SMH , sank 4%.
Meanwhile, shares of electric carmaker Tesla ( TSLA ) plummeted nearly 3% after one analyst called out CEO Elon Musk for focusing on “sci-fi projects” instead of focusing on demand issues surrounding Tesla’s Model 3.
Wedbush analyst Dan Ives slashed his price target on the stock to $230 from $275, a 16% decrease. Ives cited Musk’s many distractions for the cut. “We continue to have major concerns around the trajectory of Tesla's growth prospects and underlying demand on Model 3 in the U.S. over the coming quarters which is putting more heat in the kitchen on Musk & Tesla to reign in expenses at an accelerated rate with profitability targets in 2H19, a Kilimanjaro-like uphill climb, in our opinion,” Ives wrote in a note Monday. “With a code-red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company, instead, should be laser focused on shoring up core demand for Model 3.”
Shares of T-Mobile ( TMUS ) and Sprint ( S ) were surging after the two companies announced that they would be making some changes to their $26 billion deal , including the sale of some assets. The concessions by the two companies follow talks with the Federal Communications Commission and should help ease the regulatory approval process for the merger. Shares of Sprint soared 18%, while T-Mobile jumped nearly 4%.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung .
More from Heidi: