Financial Markets Update: Chip and Tech Stocks Decline on Trade Sanction Worries

The stock market took a hit on Wednesday as the S&P 500 and Nasdaq both declined, with major chip and tech stocks leading the fall. The dip was primarily driven by concerns about potential trade sanctions on companies supplying China with advanced semiconductor technology.

According to a report by Bloomberg, President Joe Biden is considering imposing severe trade restrictions on companies like ASML from the Netherlands and Tokyo Electron from Japan if they continue to provide advanced semiconductor technology to China.

At the start of trading, the Dow Jones Industrial Average was slightly up, but the S&P 500 and Nasdaq were both in the red. Chip giant Nvidia saw a 4.3% drop, while ASML’s US-listed company slumped 9.2%. Other tech stocks such as Marvell Technology, Broadcom, Qualcomm, Micron Technology, Advanced Micro Devices, and Arm Holdings also experienced significant declines.

However, Intel was an outlier as it gained 3% despite the overall downturn in the chip sector. Stocks of major tech companies like Apple, Microsoft Meta Platforms, and Tesla fell between 1.2% and 2.7%.

On a positive note, Johnson & Johnson’s stock rose 2.7% after reporting better than expected second-quarter results. In contrast, Spirit Airlines saw an 8.2% decline after cutting its revenue outlook for the second quarter.

In the bond market, the 10-year Treasury yield remained steady at 4.16%. Meanwhile, gold prices hit a record high on Wednesday due to optimism about a potential Fed rate cut, with spot gold reaching $2,469.80 per ounce.

In the energy sector, oil prices rose thanks to a decrease in US oil stockpiles and a weaker dollar. Brent crude oil futures were up 0.7% at $84.28 a barrel, while US West Texas Intermediate crude futures gained 0.9% to $81.51.

Overall, the market experienced a mix of ups and downs driven by trade concerns, earnings reports, and macroeconomic factors. Investors will be closely watching developments in the tech and energy sectors in the coming days to gauge market stability and future trends.