Wall Street experienced a sharp downturn on Wednesday, sending shockwaves across global markets. The Nasdaq index plunged over 3%, marking one of its steepest single-day declines in recent months, as escalating US-China trade tensions and fresh export restrictions on AI chips rattled investor confidence. The sell-off wiped out an estimated $1.5 trillion in market capitalization from US equities.
A Soft Start for Indian Markets Following Wall Street Jitters
Reacting to this global tremor, Indian markets opened slightly lower on Thursday morning after four consecutive sessions of gains. While a mild recovery was seen during intraday trading, the early sentiment was clearly dampened by the rout in the US tech sector.
Semiconductors Take the Biggest Hit
At the center of the storm were semiconductor giants Nvidia and AMD, which saw their shares plunge over 8%. The US Department of Commerce introduced fresh licensing requirements for exporting AI chips to China, a move that could significantly hurt revenue for chipmakers.
Nvidia estimated potential losses of $5.5 billion due to the export curbs. The announcement triggered a chain reaction, pulling down not only the semiconductor stocks but also tech titans like:
- Meta and Microsoft: Down by approximately 2%
- Tesla: Fell over 3%
The overall pressure dragged the Nasdaq down by 516 points, while the S&P 500 dropped over 2%. The Dow Jones Industrial Average also slipped by more than 1.5%, highlighting the broad impact of the tech-led sell-off.
Fed Chair’s Comments Add Fuel to the Fire
Further deepening the market gloom were comments from Federal Reserve Chairman Jerome Powell, who expressed concerns over the slowing pace of U.S. economic growth. Powell noted that rising imports, spurred by companies trying to avoid upcoming tariffs, could weigh on the nation’s GDP.
His statement underscored the growing unease among policymakers regarding the economic fallout of the escalating tariff war, particularly with China. Investors took these comments as a sign of potential monetary policy uncertainty in the coming months.
The Bigger Picture: Tariff War’s Global Fallout
Market experts believe that the semiconductor industry is at the epicenter of the current US-China standoff. As both countries tighten trade controls on advanced technologies, especially AI and chip manufacturing, companies operating in these sectors face major revenue disruptions and supply chain bottlenecks.
The latest export restrictions signal a new phase in the tech cold war, increasing the likelihood of further market volatility. This development comes at a time when global markets are already navigating high inflation, geopolitical tensions, and central bank tightening.
While Indian markets showed signs of resilience by paring some early losses, the global headwinds remain significant. With Nvidia and AMD’s profit outlook under pressure, and the Fed flagging economic slowdown, investors across the world are likely to remain cautious in the days ahead.
Analysts advise keeping an eye on upcoming earnings reports, Fed policy signals, and any new trade developments, especially between the US and China, which could continue to sway global equity sentiment.
