Trade Tension Turbulence
Despite notable gains at the beginning of the week, the market experienced severe fluctuations following some foreign policy changes. These changes, which aim to toughen foreign-investment reviews, re-ignited trade tensions and caused U.S. stocks to decline.
Many stocks, such as The Dow Jones Industrial Average (DJI), started out the week with record highs. However, the DJIA fell 0.5%, while the S&P 500 (INX) lost 11.13. Additionally, Nasdaq Composite (NASDAQ) dropped 0.4%. Other strong stocks such as Wells Fargo (WFC), American Express (AXP) and Bank of New York (BK) also reported disappointing losses.
While political tensions may have negatively affected certain sectors, the market shrugged off the turbulence, with most major US indices ending slightly positive and the dollar gaining strength. It is expected that tariffs will be the primary subject of conversation next week when the president of the European Commission visits the White House.
EU Fines Google
Google (GOOG) was fined $5 billion by the EU on Wednesday. The fine was imposed on the grounds of Google’s anti-competitive behaviors. The EU stated that Google broke the rules in requiring phone manufacturers to pre-install Google apps onto Android devices. While this fine is not out of the company’s means, it is consistent with the EU’s trend of desiring more control over tech companies than the U.S
Despite the high fine, Alphabet’s stock dipped less than a percent after the announcement and ended the session trading higher than the previous day’s close. It is likely that even if Google apps are no longer pre-downloaded onto Android phones, their revenue cuts will suffer minimally, as customers are expected to continue using the apps.
Microsoft Cracks the Cloud
Microsoft (MSFT) reached $100 billion in annual revenue for the first time, which serves as a reflection of the company’s changing image. Under CEO Satya Nadella, the 43- year old software company has established itself as a strong provider of cloud computing technology.
While Microsoft shares experienced minimal movement after positive fourth-quarter reports, they rose 3% following finance chief Amy Hood’s expectations for a strong current quarter.
Microsoft’s initiatives in expanding its cloud business have increased the company’s shares by more than 40% in the past year. Additionally, the company’s market cap is about $800 billion, putting it in the same league as internet giants such as Apple (AAPL) and Amazon (AMZN).