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Tech stocks led a Wall Street sell-off on Wednesday after chipmaker Nvidia revealed that new US controls on sales to China would wipe billions of dollars from its earnings, dragging its peers sharply lower.
The Philadelphia Semiconductor index lost 6.4 per cent, taking its loss for the year to more than 24 per cent. All 30 of its constituent stocks fell.
Nvidia was hardest hit, down 10 per cent, after it said in a filing late on Tuesday that the Trump administration’s plans to clamp down on the company’s sales of its H20 chip to China would dent earnings by about $5.5bn.
Wednesday’s declines — which accelerated as Federal Reserve chair Jay Powell warned tariffs could put its inflation and employment goals at risk — for chipmakers pulled the tech-heavy Nasdaq Composite 4 per cent lower, while the blue-chip S&P 500 lost 2.8 per cent.
Bank of America strategists said semiconductor shares were falling because “rising AI restrictions” were likely to hit related stocks including Broadcom, Advanced Micro Devices and Arm.
Tech stocks, which were fresh from a more than two-year rally at the start of this year, have been hit particularly hard by President Donald Trump’s aggressive tariff policies, which earlier this month included steep “reciprocal” levies on all big US trading partners.
The measures have fanned concerns about slowing economic growth and sparked a wave of selling of dollar-denominated assets.
The Nasdaq entered bear market territory in early April, marking a decline of more than 20 per cent from its mid-February high. But it subsequently rebounded when the White House announced a 90-day pause to the “reciprocal” tariffs, with the exception of those on China.
Tech stocks had climbed further on Monday after the White House said smartphones and other consumer electronics would be excluded from the additional duties, though officials said they could later be subject to tariffs on semiconductors.
In currency markets, the dollar fell sharply against a basket of six peers, taking its decline this year to more than 8 per cent.
US 10-Year Treasuries yields, which move inversely to prices, fell slightly on Wednesday.
Gold prices climbed more than 3 per cent to a fresh record high of $3,332 a troy ounce.
The stock market declines come as the World Trade Organization warned on Wednesday that Trump’s tariffs could drag the world into a recession, with global output at risk of falling as much as 7 per cent.
US retail sales data released on the same day showed a bigger-than-expected 1.4 per cent increase in March.
But Bill Adams, chief economist for Comerica Bank, attributed the rise to “panic buying” as “consumers rushed to buy goods before tariffs pushed prices up”.
Adams said he expected lower consumer confidence to weigh on spending in the near future, with businesses more likely to hold off on hiring as they wait for more clarity on tariffs.
