Welcome back from the Fourth of July holiday, and welcome to a new front in the tech cold war between the U.S. and China.<\/p>\n
Beijing announced export controls on gallium and germanium\u2014two obscure minerals key to the production of semiconductors Monday. And now the Biden administration is set to restrict Chinese companies\u2019 access to U.S. cloud-computing services that use AI chips, The Wall Street Journal reported.<\/p>\n
While the U.S. move seems intended to close a loophole, China\u2019s export controls could have far wider consequences.<\/p>\n
China is going after raw materials. Gallium and germanium both feature on the U.S. government\u2019s list of minerals \u201ccritical to the U.S. economy and national security.\u201d<\/p>\n
It\u2019s a warning to the rest of the world. Chinese state-run newspaper the Global Times said it shows \u201cChina will not be passively squeezed out of the global semiconductor supply chain.\u201d A former Chinese vice commerce minister described it as a \u201cwell-thought-out heavy punch.\u201d<\/p>\n
China\u2019s sluggish economic recovery ought to weaken its position when it comes to talks with the U.S. but the risk of losing its dominance seems to have emboldened Beijing.<\/p>\n
That may explain the juxtaposition between actions and words. China\u2019s President Xi Jinping urged countries to avoid decoupling and cutting international supply chains, just a day after announcing the export controls. Treasury Secretary Janet Yellen\u2019s visit to China Thursday is another sign that both sides want progress. But the escalation of their tit-for-tat fight completely undermines that.<\/p>\n
The global chip sector will be rapidly assessing any potential impact, as will countries reliant on China\u2019s exports. Chip stocks have had a stellar 2023 so far, the PHLX Semiconductor Index is up 46% since the start of the year, while Nvidia shares have surged 190%. <\/p>\n
For investors, the question will be whether China\u2019s bold move, or anything, can derail the remarkable tech stock rally.<\/p>\n
\u2014Callum Keown<\/em><\/p>\n *** Join MarketWatch\u2019s personal finance reporter Andrew Keshner today at noon when he talks to deputy enterprise editor Jillian Berman on what borrowers need to know about their loans after the Supreme Court\u2019s decision on the Biden administration\u2019s loan forgiveness plan. Sign up here.<\/em><\/em><\/em><\/p>\n Try your hand at this morning\u2019s Barron\u2019s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n Meta Platforms is preparing to launch a microblogging service to rival Elon Musk\u2019s Twitter. It will be a golden opportunity for Meta CEO Mark Zuckerberg to expand his reach into a new social-media niche that is arguably being poorly served.<\/p>\n What\u2019s Next:<\/strong> Meta\u2019s Threads is well placed to attract displaced Twitter advertisers and profit from a future rebound in the advertising market. For Threads to really take off, it will likely need to bring over key Twitter users, and now is probably the right moment for Meta to strike. But in terms of the physical bout\u2014the outcome is anyone\u2019s guess.<\/p>\n \u2014Adam Clark, Tae Kim, Rupert Steiner<\/em><\/em><\/em><\/p>\n Housing Recovery Complicates Fed\u2019s Fight Against Inflation<\/h2>\n The U.S. housing market is starting to recover, which will raise shelter costs and complicate the Federal Reserve\u2019s fight against inflation. Prospective buyer traffic to new homes has nearly doubled in the past six months, despite still-high mortgage rates and a smaller supply of available homes.<\/p>\n Beazer Homes USA,<\/span> What\u2019s Next:<\/strong> Most builders will report second-quarter earnings in mid-to-late July. Since the housing market began to moderate from its frothy pandemic pace last summer, financial comparisons are expected to become easier in the second half of the year.<\/p>\n \u2014Megan Cassella, Shaina Mishkin, and Janet H. Cho<\/em><\/p>\n An agreement by Saudi Arabia and Russia to cut oil production through at least August could be a boost for U.S. oil producers such as What\u2019s Next:<\/strong> Gasoline prices are also falling. The national average is $3.529 a gallon, which is $1.28 a gallon below last year\u2019s price. The EIA says with gas demand dipping, rising supply has helped limit price increases at the gas pump.<\/p>\n \u2014Liz Moyer and Avi Salzman<\/em><\/p>\n \n Walt Disney\u2019s<\/span> What\u2019s Next:<\/strong> The actors\u2019 union in Hollywood agreed with studios to keep negotiating through mid-July, temporarily averting the threat of another labor strike in the industry after the writers\u2019 industrial action in May. The SAG-AFTRA union and studios are extending their current contract through July 12.<\/p>\n \u2014Janet H. Cho and Hannah Ziegler<\/em><\/p>\n***<\/h4>\n
Facebook Owner Meta to Launch Rival to Musk\u2019s Twitter<\/h2>\n
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\n iShares U.S. Home Construction
\n ETF is up 38% this year as home builders rise.
\n Toll Brothers
\n stock has gained 58%;
\n Lennar
\n is up 38%;
\n PulteGroup
\n is up 70%; and
\n D.R. Horton
\n has climbed 35%.<\/p>\n<\/li>\n
\n Green Brick Partners,<\/span><\/p>\n
\n and
\n M\/I Homes,<\/span>
\n three builders with market values below $3 billion, have returned 134%, 122%, and 89% this year, respectively.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
U.S. Oil Producers Could Gain Share After Saudi Production Cuts<\/h2>\n
\n Exxon Mobil
\n and
\n Chevron.<\/span>
\n The agreement could allow U.S. firms, which are boosting production this year, to build market share. <\/p>\n\n
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Indiana Jones Movie Tops Weekend Box Office<\/h2>\n
\n Indiana Jones and the Dial of Destiny<\/em> is the latest in a string of summer movie sequels, taking an estimated $82 million at the domestic box office from its Friday opening through Tuesday, according to BoxOfficeMojo. But the blockbuster season is just getting started.<\/p>\n\n
\n Comcast\u2019s<\/span>
\n Universal, and Greta Gerwig\u2019s Barbie<\/em>, by Warner Bros.\u2014both films that cost $100 million to make\u2014will battle for top ticket sales during a shared opening weekend<\/strong> later in July. A new Mission Impossible<\/em> movie hits theaters on July 12, which cost $290 million to produce. <\/p>\n<\/li>\n***<\/h4>\n