U.S. stocks were on track to pull back sharply from record highs on Wednesday, with technology stocks under double pressure from concerns about U.S. export restrictions on China and Donald Trump’s stance on Taiwan.
Futures on the tech-heavy Nasdaq 100 Index (NQ=F) led the declines, falling 1.4%, while futures on the S&P 500 Index (ES=F) fell 1%. Dow Jones Industrial Average (YM=F) futures fell 0.3% after the index jumped 700 points on Tuesday to close at an all-time high.
Stocks fell as concerns about the risks to technology companies grew, overshadowing the high hopes for interest rate cuts that have fueled the rally in recent days. Those concerns weighed on the big companies whose artificial intelligence-powered gains have helped push the S&P 500 to fresh records this year, with chipmaker Nvidia (NVDA) falling more than 4% in premarket trading.
The Biden administration has told allies it is considering tougher restrictions on companies that continue to make advanced chip technology available to China despite existing export restrictions, Bloomberg News Agency reportedShares of ASML (ASML, ASML.AS), which has been mentioned as a potential target, fell more than 8% after the Dutch chip equipment maker reported strong quarterly earnings.
Meanwhile, Republican candidate Trump questioned US defense support for Taiwan in an interview with the Wall Street Journal. Bloomberg interview, Shares of chipmaker TSMC (TSM, 2330.TW) fell about 5% in premarket trading in New York, after losing about $30 billion in market value in Taiwan as shares there tumbled.
A fresh batch of corporate results could turn things around, as quarterly earnings across multiple sectors came in better than expected in the early days of the season. Results from Johnson & Johnson (JNJ), United Airlines (UAL) and Discover (DFS) are scheduled to be on the docket Wednesday.
Data on housing starts and industrial production is also due, as is the release of the Federal Reserve’s Beige Book, which could provide input for investors pricing in the chances of a second rate cut in 2024.
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