Tech and AI stocks experienced significant declines on Wednesday, leading to sharp drops in the Nasdaq and S&P 500 as investors reacted to potential new export controls under the Biden administration and former President Donald Trump’s comments on Taiwan. Despite the Dow Jones Industrial Average remaining flat after a substantial increase the previous day, other markets felt the impact.
The first day of Amazon’s Prime Day event marked the biggest U.S. e-commerce day in 2024, driving increased online sales.
By afternoon, the Nasdaq had fallen by 2.79% and the S&P 500 by 1.32%. The Dow, however, saw a modest gain of 0.6%, reaching 41,201 points.
The decline in AI stocks was influenced by Bloomberg’s report that the Biden administration is considering stringent trade restrictions against companies like Tokyo Electron and ASML Holding if they continue providing China with advanced semiconductor technologies. This potential foreign direct product rule (FDPR) would significantly limit the sharing of American technology, affecting both U.S. and international firms.
Adding to the market tensions, former President Trump suggested that Taiwan should compensate the U.S. for its defense efforts and criticized Taiwan for supposedly dominating America’s semiconductor industry. Taiwan’s TSMC, responsible for producing approximately 90% of the world’s most advanced chips, was highlighted in his remarks.
Specific declines in AI stocks included:
– Nvidia: down 7.08%
– Advanced Micro Devices: down 8.48%
– Super Micro Computer: down 6.8%
– Broadcom: down 7.04%
– Micron Technology: down 5.54%
– ASML: down 11.48%
Additionally, Tokyo Electron shares dropped nearly 11.12%, and TSMC’s Taiwan-listed stock fell by 6.3%.
Tech stocks were also affected, with Apple, Meta, Amazon, and Alphabet experiencing declines of 2.6%, 5%, 3%, and 1.6%, respectively.
Rocio Fabbro contributed to this report.