Nvidia Shares Drag Wall Street Down on Chip Curbs/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Nvidia’s stock plunged after the company warned that U.S. export restrictions on AI chips to China will cost billions, dragging Wall Street lower. Broader uncertainty tied to Trump’s trade war and global economic forecasts rattled markets further. United Airlines added to the unease, calling the year’s outlook impossible to predict.
Nvidia Drops, Wall Street Dips: Quick Looks
- Nvidia stock falls 5.7% on U.S. export restrictions to China
- S&P 500 down 0.9%, Nasdaq slides 1.7% in early trading
- AI chip industry hit hard as political pressure increases
- U.S.-China trade tensions deepen amid tech export bans
- United Airlines offers dual forecasts due to economic uncertainty
- Retail sales rose 1.4% in March on pre-tariff shopping
- Global markets fall amid inflation concerns and recession fears
- Treasury yields ease slightly following strong retail report
Nvidia Shares Drag Wall Street Down on Chip Curbs
Deep Look
NEW YORK — U.S. stocks opened sharply lower Wednesday as investor anxiety intensified over chipmaker Nvidia’s announcement that new export restrictions on its AI chips to China could slash billions from its bottom line. The development underscored the growing impact of President Donald Trump’s trade war on both tech firms and the broader economy.
The S&P 500 dropped 0.9%, while the Nasdaq composite, led by tech losses, slid 1.7%. The Dow Jones Industrial Average fell 180 points, or 0.4%, by mid-morning.
Nvidia’s Warning Sends Shockwaves
Nvidia was the biggest drag on the markets, tumbling 5.7% after disclosing that U.S. government restrictions on exporting its H20 chips to China could wipe out an estimated $5.5 billion from its first-quarter results. These chips are critical to artificial intelligence advancements and have become a flashpoint in the ongoing U.S.-China technology rivalry.
The Biden and Trump administrations have both tightened restrictions on advanced semiconductor exports over national security concerns. The new rules specifically target chips that could contribute to China’s military or surveillance capabilities.
Sen. Elizabeth Warren, a Democrat, added bipartisan weight to the crackdown, urging the U.S. Commerce Department to restrict AI chip exports, citing national security risks.
Broader Chip Sector Takes a Hit
The ripple effect extended across the semiconductor industry. Advanced Micro Devices (AMD) also dropped 5.7%, while in Europe, ASML—a key supplier to chipmakers—fell 5.3% after issuing a cautious forecast and noting the “dynamic” environment created by tariffs.
“The recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while,” said ASML CEO Christophe Fouquet.
United Airlines: “Impossible to Predict” Economy
The uncertainty isn’t limited to tech. United Airlines added to investor nerves by issuing two separate forecasts for 2025—one assuming a recession and another assuming continued growth. The airline cited the volatile trade landscape as a major reason for the unpredictability.
Despite the caution, United’s stock rose 1.2% after reporting a stronger-than-expected quarterly profit, with executives noting an uptick in bookings for premium and international travel.
“It’s impossible to predict this year with any degree of confidence,” United said in a statement.
Tariff Fears Drive Preemptive Consumer Spending
Meanwhile, a report showed that U.S. retail sales jumped 1.4% in March, significantly above forecasts. The uptick was largely driven by consumers rushing to buy big-ticket items, like cars and electronics, before tariffs inflate prices. This surge followed a sluggish start to the year, with January sales falling 1.2% and February inching up just 0.2%.
The sales spike may reflect short-term panic buying, not sustained economic strength. Economists warn that higher tariffs could ultimately dampen consumer demand by forcing businesses to raise prices across the board.
Consumer Confidence Slides
Mounting uncertainty is already showing up in sentiment data. April’s University of Michigan consumer sentiment index fell to 50.8, an 11% drop from March and the lowest reading since the COVID-19 pandemic.
The prolonged trade conflict, rising inflation expectations, and fears of job losses are contributing to a more cautious consumer mindset, which analysts warn could eventually lead to a spending pullback and tip the U.S. into a recession.
Recession Fears Grow Among Investors
A Bank of America survey of global fund managers revealed that recession concerns are at their fourth-highest level in 20 years. Trump’s aggressive tariff strategy—intended to bring back U.S. manufacturing and reduce the trade deficit—is being blamed for heightening inflation pressures and market volatility.
In the bond market, Treasury yields edged lower, signaling investor caution. The 10-year Treasury yield slipped to 4.33% from 4.35%.
Global Markets Mirror U.S. Decline
Markets across Europe and Asia also reacted negatively:
- Hong Kong’s Hang Seng Index fell 1.9%
- Tokyo’s Nikkei slid 1%
- Seoul’s Kospi dropped 1.2%
- Paris’ CAC 40 dipped 0.7%
- London’s FTSE 100 slipped 0.4% after data showed a second consecutive month of falling inflation in the U.K., largely due to cheaper gas prices
Outlook: Volatility Likely to Continue
With tech stocks under pressure, trade policy in flux, and consumer sentiment waning, analysts expect continued market volatility in the weeks ahead. All eyes are on upcoming economic indicators and policy moves from Washington as businesses and investors try to chart a path forward.
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