Nvidia stock (NASDAQ:NVDA) took a significant hit on Wednesday, dragging Wall Street down after the company revealed that new restrictions on exports to China would severely impact its earnings. The announcement from the tech giant, which highlighted a potential loss of billions in revenue, added to concerns already mounting over ongoing trade tensions between the United States and China.
Market Downturn Due to Nvidia Stock’s Decline
The S&P 500 fell by 0.9% early in the trading session, with Nvidia’s steep 5.7% drop contributing heavily to the negative momentum. The Dow Jones Industrial Average also saw a decline of 180 points, or 0.4%, while the Nasdaq composite, led by the poor performance of Nvidia and other chip stocks, dropped by 1.7%. Nvidia stock was the biggest weight on the market after it revealed that U.S. restrictions on its H20 chips—used for artificial intelligence technology—would slash its revenue by up to $5.5 billion.
Trade Tensions Impacting the Tech Sector
The United States and China, the world’s two largest economies, have been in a heated trade war for years. The introduction of export limits on Nvidia’s advanced AI chips, which are feared to be used in military and surveillance operations by China, has created a new layer of uncertainty in the market. These actions have garnered support from both major political parties in the U.S., with figures like Senator Elizabeth Warren calling for more aggressive measures against Chinese technology advancements.
Other companies in the chip industry, like Advanced Micro Devices (NASDAQ:AMD), also experienced sharp declines, with AMD dropping by 5.7%. In Amsterdam, ASML Holding (AMS:ASML), a key supplier to the semiconductor industry, saw its stock fall by 5.3%. ASML’s CEO, Christophe Fouquet, cited the ongoing tariff conflicts and uncertainty in the macroeconomic environment as key factors influencing the company’s outlook.
United Airlines Provides Mixed Economic Forecasts
The effects of trade policies, particularly tariffs, have caused widespread economic uncertainty, leading some companies to provide varying financial forecasts for the remainder of the year. United Airlines (NASDAQ:UAL) stated that it had to release two different forecasts for its 2025 financial performance—one in the event of a recession and one without. The airline acknowledged that predicting the economy with any certainty had become “impossible.” However, United’s stock rose by 1.2% after reporting stronger-than-expected quarterly profits and noting growth in bookings for international flights and premium cabins.
Global Economic Concerns Amid Trade Wars
Concerns about a recession continue to mount, as tariffs imposed by President Trump and rising geopolitical tensions increase pressure on both domestic and international markets. A Bank of America survey of global fund managers revealed that expectations for a recession are at the fourth-highest level in the last two decades. Additionally, many analysts worry that tariffs will drive up inflation, as U.S. importers may raise prices for consumers to cover the increased costs of imported goods.
Despite the pessimistic outlook, U.S. retail sales have shown positive growth, with March sales increasing by 1.4%, compared to a 0.2% rise in February. The surge in retail activity could be due to consumers rushing to make purchases before potential price hikes due to tariffs, particularly for goods like automobiles and electronics.
Global Market Responses
The ripple effects of these economic developments have been felt worldwide, with stock indexes across Europe and Asia also seeing declines. The FTSE 100 in London dropped by 0.4%, while major Asian indexes, including those in Hong Kong, Tokyo, and Seoul, experienced losses ranging from 0.7% to 1.9%.
As the trade conflict between the U.S. and China continues to evolve, tech companies like Nvidia will likely face further challenges. Investors are keeping a close eye on these developments, as restrictions on advanced technology exports could shape the future of the semiconductor industry. Economic uncertainty is expected to persist, with many markets remaining volatile.
Featured Image – Megapixl
