Some of the hottest technology stocks on the market suffered a sudden reversal Monday morning, amid reports of new efforts to block Chinese investment in and sales to U.S. tech firms and doubts about rising valuations for tech firms.

While stocks were largely awash in red in early Monday trading, tech seemed especially weak, with the Nasdaq Composite Index COMP, +0.74% suffering more than the S&P 500 index SPX, +0.45% and the Dow Jones Industrial Average DJIA, +0.29% . Some of the largest declines came from chip stocks and Chinese internet companies, which could be affected by a reported plan by President Donald Trump’s administration to establish stricter rules for Chinese investment in U.S. tech firms and exports of technology like semiconductors.

Treasury Secretary Steven Mnuchin added to the pressure when he said in a midmorning tweet that a coming announcement from the administration would not be specific to China, but rather would apply to “all countries that are trying to steal our technology.”

The hardest hit were tech stocks that have performed well of late, such as Netflix Inc. NFLX, +0.43% The streaming-media company fell more than 6% at times in the first hour of trading Monday, after running to a series of record highs in the past few weeks. Netflix stock had more than doubled so far this year, but the company revealed the departure of its top communications executive late Friday for inappropriate comments.

While Netflix does not sell its streaming service directly in China, it does partner with iQiyi Inc. IQ, +0.46% , which went public in the U.S. earlier this year and also hit a serious jag Monday to continue a volatile run. Other Chinese internet stocks were also hit, such as Alibaba Group Holding Inc. BABA, -1.13% and Baidu.com Inc. BIDU, +0.27% , with the KraneShares CSI China internet ETF KWEB, -0.86% falling about 4%.

Chip stocks also turned around, with highfliers like Micron Technology Inc. MU, -0.18% suffering. Micron, which has been helped by an increase in memory prices but has faced issues and investigations in China, dropped more than 5% Monday morning after increasing more than 31% in 2018 and more than 70% in the past 12 months. The PHLX Semiconductor SOX, +1.35% dropped more than 2% as other hot chip stocks such as Nvidia Corp. NVDA, +2.61% and Advanced Micro Devices Inc. AMD, +2.01% declined as well.

Trump and his predecessor, President Barack Obama, have stopped attempts by Chinese investors to acquire U.S. chip companies, but new rules that could be announced this week would seek to codify stricter rules aimed at stifling China’s plans to foster a native semiconductor industry by 2025, according to The Wall Street Journal. The reports were based on anonymous sources who stressed that the rules could change.

See also: Trump stops China from buying into U.S. chip industry, but what’s next?

Trump has been publicly battling China on trade, and dueling tariff threats have roiled equity markets.

Beyond China concerns, there are fears that tech stocks have become overpriced as they have spiked higher. For instance, Bernstein Research analyst Toni Sacconaghi noted Monday morning that valuations for tech companies were jumping faster than their expected future earnings, with the fastest growth coming from outside the largest tech stocks, namely the so-called FANG stocks: Facebook Inc. FB, +0.27% , Apple Inc. AAPL, +1.82% , Netflix and Google parent Alphabet Inc. GOOGL, +0.96% GOOG, +1.20%

“While tech’s year-to-date outperformance was still disproportionately driven by the sector’s 10 largest stocks, these names actually saw their earnings multiples shrink on average — in other words, it was primarily non-FANG stocks that became more expensive,” Sacconaghi wrote, adding that the tech sector now has a price-to-future-earnings ratio 1.18 times higher than the cap-weighted average, making it “the most expensive sector in the market.”

Still, Sacconaghi noted that fundamentals for many tech companies are strong, and the sector as a whole tends to be weighted toward the second half.

“As such, we continue to recommend both a modest overweight in tech and a balanced barbell between growth and value... although our bias is to add selectively to the value side of the barbell,” he wrote.