Tech Stock Crash: Nvidia, Apple, Microsoft, and Meta See Major Losses Amid US-China Trade Tensions
The Nasdaq Composite index suffered its steepest decline in two years on Wednesday, as tech stocks fell sharply due to growing concerns over potential trade restrictions between the US and China. Leading the decline was Nvidia, a major AI chipmaker with significant exposure to the Chinese market.
Nvidia Leads the Decline with a 6.64% Drop, Apple and Microsoft Follow
Nvidia’s shares plunged by 6.64%, closing at $117.97 on Nasdaq. This significant drop came as a surprise given Nvidia’s recent strong performance. Apple, which had recently surpassed Microsoft as the world’s most valuable listed company, also saw a decline, falling by 2.53% to close at $228.88 per share. Microsoft’s stock dropped by 1.33%, closing at $443.52 per share. Meta, the parent company of Instagram and Facebook, experienced a steep fall, with its stock declining by 5.68% to close at $461.99 per share.
Nasdaq Composite Hits Two-Year Low, Plunges Below 18,000
The sharp sell-off in these major tech stocks led to the Nasdaq Composite index closing at 17,996.92, shedding over 512 points or 2.77%. This was the lowest closing level since December 2022, highlighting the severe impact of geopolitical uncertainties on the tech sector. The S&P 500 index also faced a decline, closing 78.93 points or 1.39% lower at 5,588.27. Technology and communications sectors saw the steepest declines among the 11 sectors of the S&P 500, while consumer staples posted gains.
Fears of Tightened US-China Trade Relations Spark Tech Stock Sell-Off
The market turmoil was triggered by a Bloomberg report on July 16, which indicated 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 contemplating 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 sparked concerns about the potential impact on the tech industry, as China is 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 far-reaching impact of political decisions on economic performance.
The recent sharp decline in tech stocks on Nasdaq serves as a stark reminder of the market’s sensitivity to geopolitical issues. The potential tightening of US-China trade relations has triggered a significant sell-off in key stocks like Nvidia, Apple, Microsoft, and Meta. As the situation continues to evolve, investors and companies must remain vigilant and adaptable to navigate the uncertainties ahead. The market’s response highlights the importance of stable trade relations and the potential consequences of political decisions on economic stability.