US Stock Markets in Crisis
The US stock markets have recently experienced significant losses, attributed to several factors. A major reason for this is the warning from Fed Chair Jerome Powell regarding the economic consequences of US import tariffs. According to Powell, these tariffs could lead to sustained inflation and slower economic growth. Additionally, the US government has implemented stricter export restrictions on AI chips to China, which heavily impacts Nvidia and other semiconductor manufacturers like AMD.
Background
Tariff Policy and Its Effects
The aggressive tariff policy of the Trump administration remains a central theme in the financial markets. The unclear impacts of these measures create uncertainty among investors. Jerome Powell emphasized that the negative effects of the tariffs could be greater than expected and are likely to lead to higher inflation and slower economic growth.
Technological Stocks Under Pressure
The technology sector has been particularly hard-hit. The Nasdaq 100, which encompasses many tech stocks, fell by about 3 to 3.15 percent. Nvidia was a key factor here: the company’s stock fell by as much as 8.5 percent, as the tightened export restrictions on AI chips to China mean significant losses in the billions. AMD also faced costs of up to 800 million dollars and lost more than eight percent in value.
Weak Order Intake at ASML
Another factor was the surprisingly weak order intake at chip machinery manufacturer ASML in the first quarter. This also weighed on investor confidence in the technology sector as a whole.
Market Reactions and Forecasts
The Nasdaq Index fell by about three percent to just above or below 16,300 points. The Dow Jones dropped about 1.5 to two percent, closing at around 39,700 points. The S&P 500 lost about two percent, just above or below the value of around 5,275 points.
Despite occasional rallies, a complete recovery of the S&P 500 in 2025 appears unlikely. Historically, the index has rarely recovered once it has dropped significantly – this last happened during periods of strong support from the Federal Reserve, such as during the pandemic or earlier recessions. As the Fed is concerned about inflation and shows no signs of intervening soon, investors remain skeptical about a lasting upswing.
Overall, both political decisions and industry specifics in the technology sector have shaken investor confidence – a situation with far-reaching consequences for investors worldwide.