What Happened?
Shares of global professional services company Accenture (NYSE: ACN) fell 3.8% in the afternoon session after worries over worsening trade relations with China were triggered by critical comments from President Donald Trump.
Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The president's tone and the suggestion of canceling a meeting with President Xi caused a rapid sell-off in the market.
Earlier in the week, China announced new export controls on the critical minerals. Beijing's Commerce Ministry stated that foreign suppliers now need government approval to export products containing certain rare-earth materials. These materials are essential for producing high-tech goods, including computer chips, electric vehicles, and defense technology. Analysts viewed the move as a strategic assertion of China's dominance in the global rare earth supply chain, particularly amid ongoing trade tensions and ahead of an anticipated meeting between the US and Chinese presidents.
Consequently, technology stocks with significant exposure to Chinese supply chains, such as Nvidia and AMD, experienced sharp declines. This downturn was exacerbated by the bearish sentiment surrounding a prolonged U.S. government shutdown, adding to overall market uncertainty.
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What Is The Market Telling Us
Accenture’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 2.8% on the news that the August Personal Consumption Expenditures (PCE) report showed that inflation is not accelerating unexpectedly, raising hopes for future interest rate cuts.
The report, a key inflation gauge for the Federal Reserve, indicated that the headline PCE price index rose by 0.3% month-over-month, aligning with consensus forecasts. More importantly, the core index, which strips out volatile food and energy costs and is closely watched by the Fed, increased by a milder 0.2%. This steady data provided reassurance to investors that persistent inflationary pressures are stable. The market's positive reaction stems from hopes that this could keep the central bank on its anticipated path of monetary easing. Such cuts can stimulate the economy and make stocks more attractive to investors, leading to a cautiously optimistic mood on Wall Street.
Accenture is down 30.3% since the beginning of the year, and at $243.15 per share, it is trading 38.9% below its 52-week high of $398.25 from February 2025. Investors who bought $1,000 worth of Accenture’s shares 5 years ago would now be looking at an investment worth $1,055.
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