The Nasdaq slumped nearly 2% to a two-week low on Wednesday, accompanied by losses on the S&P 500, as major chip and tech stocks were pressured by the prospect of tighter U.S. trade curbs on companies giving China access to advanced semiconductor technology.
A report that the Biden Administration was considering severe trade restrictions as part of a chip clampdown against China weighed on semiconductor stocks, sending the Philadelphia SE Semiconductor index spiraling 3.5% to a two-week low.
AI-chip favorite Nvidia fell 4.3%, while ASML’s U.S.-listing slumped 9.2%.
U.S.-listed shares of Taiwan Semiconductor Manufacturing shed 6.4% after Republican presidential candidate Donald Trump said Taiwan should pay the U.S. for its defense.
Marvell Technology, Broadcom, Qualcomm , Micron Technology, Advanced Micro Devices and Arm Holdings also fell over 5% each.
All the so-called “Magnificent Seven” megacap stocks slumped, with Apple, Microsoft Meta Platforms and Tesla down between 1.2% and 2.7%.
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“Whether Big Tech can keep the leadership will depend on earnings. Pullbacks are healthy and give the markets a chance to reset and they give buyers a chance to show up and buy at better prices,” said Adam Sarhan, Founder & CEO, 50 Park Investments.
The S&P 500 tech index led sectoral losses with a 2.7% decline, while energy was the top gainer and was up 1.3%.
The small-cap Russell 2000 index also lost 0.2% after rallying nearly 12% over the last five sessions.
Signaling growing investor unease, Wall Street’s “fear gauge” briefly hit its highest mark in six weeks.
The blue-chip Dow, however, held some ground, with Johnson & Johnson rising 2.7% after a second-quarter results beat and Intel bucking the chips rout to gain 3%.
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