This week started with a bang following the trade war truce between the U.S. and China over the weekend.
Through Wednesday, the S&P 500 had notched three record-breaking days in a row, closing Wednesday at an all-time high of 2,996 – just shy of the big 3,000 mark.
The Dow also had its first record-breaking close since October, ending Wednesday at 26,966 points, and the Nasdaq closed at 8,170, its first record since the beginning of May.
But while the market is cheering, there are a handful of stocks that have more to celebrate.
The biggest winners following the ceasefire are the chipmakers. Semiconductors have been hit hard since the latter half of 2018. However, the group not only benefits from the agreement between President Trump and Chinese President Xi Jinping to put a hold on any new tariffs, but also Trump’s decision to ease his ban on companies in the U.S. selling products to Chinese telecom Huawei.
Goldman Sachs took a look at the companies with the highest sales exposure to China, and their list included several big chipmaker names, including Broadcom (NASDAQ: AVGO), Intel (NASDAQ: INTC), Micron (NASDAQ: MU), Nvidia (NASDAQ: NVDA), Qorvo (NASDAQ: QRVO), Qualcomm (NASDAQ: QCOM), and Texas Instruments (NASDAQ: TXN).
Of these, Micron and Qorvo have been the biggest winners this week and are up 6.88% and 5.1%, respectively.
Other stocks on Goldman’s list that rallied on the trade news are Yum China (NYSE: YUMC), which sees 100% of its sales from China, fiber laser manufacturer IPG Photonics (NASDAQ: IPGP), and integrated power solutions company Monolithic Power Systems (NASDAQ: MPWR). Both IPG Photonics and Monolithic Power Systems are up over 5% in the past week as of Wednesday’s close.
Another group of stocks that’s cheering are those retailers that are sensitive to the tariffs.
Last month, UBS warned that retailers with much of their merchandise exposed to Chinese tariffs were looking at “significant risk” as increased tariffs would push costs higher for the imported goods that these retailers sell.
Among those retailers with the greatest exposure to China are Floor & Decor (NYSE: FND), which sells around 45% of its goods to China according to UBS, Restoration Hardware (NYSE: RH), with 40% of its merchandise exposed to China, home-goods retailer Bed Bath & Beyond (NASDAQ: BBBY), and automotive parts suppliers Advanced Auto Parts (NYSE: AAP), AutoZone (NYSE: AZO), and O’Reilly’s Auto Parts (NASDAQ: ORLY).
With the exception of Bed Bath & Beyond—which is down just -0.36%—all of these retailers are up over the last week. The biggest winners of the group have been Restoration Hardware, which is up 11.06%, Advanced Auto Parts, up 7.14%, and Floor & Decor, up 6.78% over the last week.
“The brunt of a full 25% tariff would likely be quite inflationary as the retailers have indicated they would use strategic price actions, where possible to mitigate the impact,” said UBS equity analyst Michael Lasser.