Shares of electronic design automation company Cadence Design Systems (CDNS -10.44%) dropped late Wednesday, finishing the day down 10.4%.

Cadence is just one of a handful of companies that makes the software semiconductor designers use to design chips. With the increasing variety of chips and number of chipmakers proliferating over the past decade, it has been an excellent business.

However, a Financial Times article published late Wednesday said that the Trump administration may cut off these companies’ Chinese revenues.

Will the Trump administration cut off China?

Late on Wednesday, the Financial Times said the Trump administration’s Commerce Department has instructed Cadence, along with its oligopoly competitors Synopsis and Siemens EDA, to stop selling their software to China.

Image source: Getty Images.

The past couple of presidential administrations have been grappling with how to slow China’s advances in artificial intelligence (AI) technology, without hurting U.S.-based chipmakers that also sell into China’s massive market. Past administrations have already cut off the most advanced semiconductor manufacturing equipment to China, but if the FT article is correct, it appears the Trump administration may be attempting to cut the leading chip design software technologies off as well.

In its most recent annual report, Cadence stated that China made up about 12% of its revenue, down from 17% in the prior year. So, it’s perhaps no wonder Cadence’s stock is down by roughly the same percentage today.

Shareholders should sit tight

It’s hard to draw conclusions from this late-day FT piece, but it appears that the market may already be pricing in a worst-case scenario already, given the sudden double-digit decline.

That said, Cadence was an expensive stock to begin with, as shares were trading at 82 times trailing and 47 times forward earnings coming into the day.

As is the case with most leading chipmakers and semiconductor-oriented names, these are generally high-quality businesses with strong growth outlooks on the back of the AI boom; however, that means they are also vulnerable to geopolitics. It makes for a volatile brew.

That being said, Foolish investors shouldn’t shy away from chip stocks, as semis have been the best-performing sector over the past decade.

Shares of Krispy Kreme (DNUT -25.64%) plunged 24.4% this week through Thursday, according to data from S&P Global Market Intelligence.

Krispy Kreme delivered a first-quarter earnings report that fell well short of expectations. Even though a decline in revenue was expected, due to a divestiture last year, Krispy Kreme’s revenue came in even worse as the company continued to invest in expansion.

As a result, profits reversed to losses, forcing management to take on more debt and cut the company’s dividend.

When the dividend becomes a donut

In the first quarter, Krispy Kreme saw revenue decline 15.2%, although organic revenue was down a more modest 1%. Still, that figure missed expectations by a fair amount. Even though sales came in soft, the company continued to invest in growth, expanding its global points of access by 21.4% relative to last year.

As a result of the softer-than-expected revenue per store but increased costs of that store growth, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell a severe 58.8%, and adjusted net income fell from an $11.3 million profit last year to an $8.8 million loss.

Describing the results, management pointed to a “challenged” consumer, specifically noting, “macroeconomic, weather, and inflationary factors.”

As a result of its desire to keep growing despite sinking sales per store, management decided to cut the company’s dividend payout to zero, even as it took on more debt.

Image source: Getty Images.

Aside from the dividend cut, another troubling aspect was that Krispy Kreme said that it would not expand into any more McDonald’s (NYSE: MCD) restaurants in the second quarter of this year. In the release, management said, “The Company is reassessing the deployment schedule together with McDonald’s while it works to achieve a profitable business model for all parties.”

This is somewhat troubling as the McDonald’s partnership had been touted by management as a key potential growth driver; however, it looks as though the arrangement might not yet be profitable for Krispy Kreme at current sales levels.

Are cash-strapped consumers skipping dessert?

One potential bright spot was that management guided for things to improve a bit in the second quarter, with revenue guidance between $370 million and $385 million, along with adjusted EBITDA of $30 million to $35 million.

So, at least things aren’t expected to get worse. That being said, Krispy Kreme is still making losses, and its debt has grown to $935 million as of the end of the quarter.

While the slashed dividend will help conserve cash, the high debt load combined with a highly uncertain macroeconomic picture makes Krispy Kreme a risky bet, even after its 24.4% decline this week.

Shares of home goods and wellness products company Helen of Troy (HELE -10.31%) plunged 10.4% on Monday. The company, which has encountered severe headwinds in recent months — including an earnings report that underwhelmed and uncertainty over tariffs — abruptly announced after market close last Friday that its CEO was moving on.

While some CEO departure announcements are greeted with an appreciation in a struggling stock on hopes of a turnaround, apparently, the market took Helen of Troy’s announcement as a sign things may be worse under the surface.

No permanent successor yet in place

Late Friday afternoon, Helen of Troy announced that CEO Noel Geoffroy was stepping down as CEO, “effective immediately.” Of note, Geoffroy had only been CEO for one year, assuming the role in March 2024.

The “effective immediately” seems to imply a sudden and harsh decision. That may cause investors to worry that there are bigger problems under the surface.

The company did announce that it was promoting CFO Brian Grass to the CEO role, but only on an interim basis, as the board conducts a search for the company’s next CEO. While Grass was CFO from 2014 to 2021 and then again since 2023, it appears the appointment of a long-tenured executive didn’t quell investor uncertainty.

Helen of Troy has plunged 58% so far this year. While the company actually beat revenue expectations last quarter slightly, its adjusted (non-GAAP) EPS fell short of estimates. Furthermore, revenue declined 0.7% overall, and this is in spite of the December 2024 acquisition of Olive & June. On an organic basis, the revenue declines were an even worse 4.9%. Investors might also be worrying about the fact that the Olive & June acquisition increased the company’s debt by $235 million, which would be an added burden in a recessionary scenario.

Image source: Getty Images.

Helen of Troy in limbo

While earnings underwhelmed last month, it was really the prospect of tariffs that accounted for the bulk of the stock’s decline. Helen of Troy manufactures its household products in China, Vietnam, and Mexico, so it will have to either adapt to the new tariff regime, whenever that is settled, or hope the tariffs fall away as trade deals are struck.

While investors don’t know what’s behind the CEO’s resignation, the sudden nature of the decision and lack of preparation for a replacement understandably has investors on edge. Even at just 5.5 times expected 2025 adjusted earnings, Helen of Troy’s declining top-line and debt load make it a risky choice; perhaps a value trap.

Rising trade tensions are not good news for companies that make their money transporting goods.

Shares of United Parcel Service (UPS -0.71%) plunged as much as 18% following the early April U.S. tariff announcement and were not able to regain much of that drop in the weeks that followed. UPS finished down 13.4% in April, according to data provided by S&P Global Market Intelligence.

Image source: UPS.

Headwinds to continue through 2025

Transportation companies have been driving into a lot of headwinds of late. Shares of UPS have lost more than half of their value in less than three years.

First, the culprit was macroeconomic worries causing large corporations to de-stock inventory, creating a decline in demand for shipping services. United Parcel Service also has been attempting to streamline and focus only on its most profitable lines of business, dumping lower-margin customers like Amazon in the process. That could be a good long-term decision, but in the near term it means a fall in revenue.

The prospects of a trade war further clouded investor hopes for a turnaround. While tariffs were expected, the magnitude of the levies caught investors off guard. With United Parcel Service facing a slowdown that could potentially take more than a year to play out, the stock has remained under pressure.

Is UPS stock a buy?

The company is not sitting still. Late last month, United Parcel Service said it was targeting $3.5 billion in cost reductions in 2025 through network reconfigurations, including the closing of more than 100 less productive facilities. The company is targeting about 20,000 positions for reduction this year.

It is also rushing to expand into higher-margin verticals like shipping for healthcare companies and providing services for small and mid-sized businesses. In April, UPS announced a $1.6 billion deal to acquire Andlauer Healthcare Group to enhance its capabilities in Canada.

Though the business is stuck in a difficult cycle, the need for transportation services is not going to evaporate, and UPS is one of only a handful of companies with the national size and scale to capitalize on long-term demand trends.

Investors will need to be patient, but for those who are willing to ride out the storm, UPS does offer a nearly 7% dividend yield at current prices. For those interested in a mix of growth and income with time to wait out a cycle, this could be a good time to consider shares of United Parcel Service.

The crypto market took it on the chin early on Friday and it wasn’t the industry’s fault. Instead, it was weak economic data that caused the sell-off. If you’re wondering why cryptocurrencies aren’t a hedge against the economy and inflation, you only need to look at history. The last time the economy slowed and inflation jumped, Bitcoin’s value collapsed.

As of 1:30 p.m. ET, in the last 24 hours Bitcoin (BTC -4.09%) is down 3.6%, Ethereum (ETH -6.95%) is off 6.3%, and Dogecoin (DOGE -5.75%) is down 4.9%. Could the decline continue?

Crypto’s economic reality

Like it or not, cryptocurrencies trade more correlated to growth stocks than they do as a hedge against inflation or the broader economy. In general, low interest rates are good and higher interest rates are bad. In a related note, low inflation is good for crypto and high inflation is bad.

Bitcoin, in particular, has been sold as an inflation hedge, but history says it’s the opposite.

Bitcoin Price data by YCharts

And that brings us to economic data that came out today. The PCE price index, which measures personal consumption expenditures, rose an expected 2.5% from a year earlier, as expected, but core PCE was up 2.8% and January’s core PCE was revised upward. This was ahead of any impact tariffs may have on the price of goods in the future.

Higher prices put pressure on the Federal Reserve, which would like to boost the economy with lower rates, but may need to raise rates to offset inflation. It’s in a tough position and higher rates would likely be bad for cryptocurrency valuations.

Consumers are already feeling nervous

Another data point today was the University of Michigan’s consumer sentiment index, which dropped to a reading of 57 in March and the Conference Board’s Expectations Index fell to 52.6. A higher reading means consumers are getting more bullish on the economy while a lower reading shows the opposite.

Lower confidence and higher prices are a bad combination for the market, especially risky assets like crypto.

Why crypto’s collapse may not be done

The reality for crypto investors is the worst may still be ahead. It looks like higher prices are here to stay given rising tariffs and a potential trade conflict with seemingly every country that supplies the U.S. with goods.

A weaker economy and higher inflation would likely be terrible for cryptocurrency values. Crypto is a risk asset and it doesn’t have any real utility today, so if people need funds they’re likely to either sell crypto or at the very least buy less. And with no underlying business, cryptocurrency values rely on the next buyer to remain viable. Buyers could dry up in a bad economy.

I also think the tailwinds that drove the crypto recovery late in 2024 haven’t resulted in a fundamental change in the industry. Bitcoin, Ethereum, and Dogecoin aren’t accepted any more by businesses than they were and the real momentum is in stablecoins, which use the blockchain but don’t have the volatility of cryptocurrencies.

I don’t think the sell-off is over and it may be a while before the economy and market hit bottom.