The Nasdaq Composite index experienced its worst day in two years on Wednesday, with a sharp decline in tech stocks driven by rising concerns over US-China trade tensions. Nvidia, a leading AI chipmaker with significant revenue from China, led the decline.
Nvidia Sees 6.64% Decline, Apple and Microsoft Stocks Also Drop
Nvidia’s shares dropped by 6.64%, closing at $117.97 on Nasdaq, a significant fall given its recent surge. Apple, which had recently surpassed Microsoft as the world’s most valuable listed company, fell by 2.53% to close at $228.88 per share. Microsoft also experienced a decline, dropping by 1.33% to close at $443.52 per share. Meta, the parent company of Instagram and Facebook, saw its stock plummet by 5.68% to close at $461.99 per share.
Nasdaq Composite Plunges Below 18,000 Amid Tech Stock Sell-Off
The sell-off in these tech giants led to the Nasdaq Composite index closing at 17,996.92, losing over 512 points or 2.77%. This was the lowest closing since December 2022, reflecting the significant impact of geopolitical uncertainties on the tech sector. The S&P 500 also saw a decline, closing 78.93 points or 1.39% lower at 5,588.27. Among its 11 sectors, technology and communications faced the steepest declines, while consumer staples posted gains.
Biden Administration’s Trade Policy with China Sparks Investor Panic
The market downturn was triggered by a Bloomberg report on July 16, suggesting that the Biden administration is considering further tightening trade relations with China. This potential move aims to restrict China’s access to advanced semiconductor technology produced in the US. The administration is considering reinstating the Foreign Direct Product Rule (FDPR), a 1959 provision that allows the US government to control the trade of technology developed domestically.
This news has raised concerns about the potential impact on the tech industry, as China remains a crucial market for many US tech companies. Nvidia, in particular, could face significant revenue losses if these restrictions are enforced. The uncertainty surrounding US-China trade relations underscores the interconnectedness of global markets and the profound impact of political decisions on economic performance.
The recent sharp decline in tech stocks on Nasdaq highlights the market’s sensitivity to geopolitical developments. The potential tightening of US-China trade relations has triggered a massive sell-off in key stocks like Nvidia, Apple, Microsoft, and Meta. As the situation continues to unfold, investors and companies must remain vigilant and adaptable to navigate the uncertainties ahead.