U.S. stocks fell sharply as Nvidia warned that new restrictions on exports to China would heavily impact its results. The uncertainty surrounding President Donald Trump’s trade war also weighed on the market. The S&P 500 sank 2.2%, nearing one of its worst losses in recent years.
The Dow Jones Industrial Average dropped 699 points, or 1.7%, and the Nasdaq composite fell 3.1%. Federal Reserve Chairman Jerome Powell reiterated that Trump’s tariffs could slow the economy and raise inflation more than anticipated. He said the Fed needs more time to assess whether to adjust interest rates in response to these economic pressures.
Nvidia’s stock dropped 6.9% after announcing that the U.S. government is restricting the export of its H20 chips to China. This restriction is expected to cost Nvidia $5.5 billion in the first quarter. Advanced Micro Devices’ stock fell 7.3% after announcing that U.S. limits on exports to China may cost up to $800 million.
The unpredictability of Trump’s trade war has put companies across various industries in a precarious situation. United Airlines, citing economic uncertainty, issued two distinct financial forecasts for the year based on whether a recession occurs.
Stocks drop amid export restrictions
Investors are increasingly worried about a potential recession driven by the tariffs. A Bank of America survey of global fund managers indicates recession expectations at their fourth-highest level in the past 20 years. The World Trade Organization projected that current tariffs could lead to a 0.2% decline in global merchandise trade volume for 2025.
WTO Director-General Ngozi Okonjo-Iweala warned that ongoing uncertainty could severely hamper global growth. Shares of J.B. Hunt Transport Services, a major U.S. logistics company, dropped 7.7%, reflecting the broader market turmoil. All told, the S&P 500 fell 120.93 points to 5,275.70.
The Dow Jones Industrial Average dropped 699.57 points to 39,669.39, and the Nasdaq composite dipped 516.01 points to 16,307.16. Concerns about inflation, driven by tariffs, have led U.S. consumers to hasten purchases of automobiles, electronics, and other goods before potential price hikes. However, surveys indicate growing pessimism among U.S. households about the economy.
In the bond market, Treasury yields fell modestly following Powell’s comments. The yield on the 10-year Treasury note dropped to 4.28% from 4.35% late Tuesday. Global markets also felt the impact, with declines in Asian indexes and mixed results in European markets.
