On Wednesday, US stock markets experienced significant losses after the prices had behaved relatively stably in the days prior. This development was influenced by several factors:
Main Reasons for the Losses
Warnings from Fed Chair Jerome Powell: Powell warned about the negative effects of US import tariffs on inflation and economic growth. He emphasized that the tariffs could likely lead to at least a temporary increase in inflation, with inflationary effects potentially lasting longer.
Weak Orders from ASML: The world’s largest chip-making machinery company, ASML, reported surprisingly weak orders in the first quarter, which dampened sentiment in the technology sector.
Tightened Export Restrictions for AI Chips to China: The US government tightened restrictions on the supply of AI chips to China, putting particular pressure on the semiconductor industry. Companies like Nvidia and AMD had to face significant losses. Nvidia will account for a burden of $5.5 billion, while AMD estimates costs of up to $800 million.
Impact on the Markets
- Nasdaq 100: The index, heavily influenced by technology stocks, fell by about 3.04 to 3.15 percent to values between 18,236.17 and 18,257.64 points.
- Dow Jones Industrial: The Dow Jones dropped by about 0.51 to 1.73 percent, closing between 39,669.39 and 40,163.51 points.
- S&P 500: The broad market index lost about 1.12 to 2.24 percent, closing between 5,275.70 and 5,336.10 points.
Individual Stock Movements
- Nvidia and AMD: Both companies lost significant value as they were affected by the export restrictions. Nvidia shares fell by up to 8.5 percent, while AMD shares dropped by more than eight percent.
- Hertz: The stock of the car rental company surged by over 19 percent after hedge fund Pershing Square Capital Management announced a significant stake.
- Travelers: The shares of the insurance conglomerate rose by about 1.6 to 3.6 percent as the company reported better-than-expected earnings per share despite a profit decline due to the wildfires in California.
Overall, the warnings from the Fed Chair and the challenges in the technology sector have significantly weighed on US stock markets, leading to a sharp decline in prices.