Apple Shares Fall as China Targets App Store in Trump Tariff Retaliation

The market is back under some pressure amid Wednesday morning’s weakness in Alphabet GOOGL shares but also those for Apple AAPL and, to a much smaller extent, AMD AMD.

Meanwhile, the stronger-than-expected January ADP Employment Report showed 183,000 jobs added during the month, which was greater compared to December and the 150,000 consensus for the month. ADP’s findings also showed that wage growth for job stayers accelerated in January to 4.7% year over year, from 4.6% in December. Not a big change but one that supports inflation pressures remaining sticky.

The takeaway from ADP’s report is, when we hear from several Fed heads today, it will prompt them to stick to the updated script offered by Fed Chair Powell at the recent policy presser. By that we mean with the employment market solid, the Fed will look for inflation to get back on the path toward its 2% target on a sustained basis, and that timing will dictate when the Fed delivers its next rate cut. Based on the growing evidence of data, the likelihood of that cut shifting into 2H 2025 versus the current market consensus of the Fed’s June policy meeting rising.

Apple, Trump and China

We discussed the issues weighing on GOOGL shares and our plan for them earlier. Turning to Apple, the pressure stems from reports that Chinese regulators are considering whether to open a formal probe into the company’s App Store fees and policies. While we try not to be conspiracy theorists, the proximity of such reports following China’s retaliation tariffs on Tuesday is glaring and supports the probability of trade and tariffs ripples like this keeping the market on its toes.

With President Trump yet to respond to China’s retaliation tariffs announced on Tuesday, this move to target Apple suggests we are likely to see additional actions by Trump that would ratchet up market volatility in the near term. At the same time, President Trump's plan for U.S. to takeover the Gaza Strip, while getting support from Israel, is seeing other U.S. allies reject the proposal, setting up further geopolitical conflict.

Those developments support our decision to maintain the inverse ETF positions we added to the Portfolio on Monday. We will continue to evaluate these two positions as new developments are had and we continue to view them more as a short-term holding than an investment.

AMD

With AMD, the company shared that its Data Center GPU revenue exceeded $5 billion last year (about 20% of total 2024 revenue) but rather than provide explicit guidance for this year, it indicated its data center business, including GPUs, would grow a strong double-digit percentage this year.

Compared to the overall capital spending increase we are seeing between Alphabet, Microsoft MSFT and Meta META, that guide is satisfactory, not compelling, and raises questions. Adding to that thinking was the comment we shared earlier from Alphabet that its proprietary Trillium AI chipset saw a strong uptake in the December quarter. Our take on the drop in AMD shares is that it reflects the company losing ground to Nvidia NVDA Marvell MRVL and others for AI and data center chip demand.

Coming Up

Coming up, we have the January Service PMI reports from ISM and S&P Global, and some data mining to share from other companies that reported on Tuesday night and Wednesday morning.

Programming Note

As I move between meetings and interviews, I will do my best to get to today’s Daily Rundown video and we will still have Portfolio Office Hours today, although I may be a little late getting to them. Drop your questions in the Forum and I’ll respond as I can later today.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long GOOGL, APPL, MSFT, META, NVDA and MRVL.