Nasdaq Index: Powell Bearish Comments, Chip Curbs Trigger Broad Tech Stock Selloff

Wall Street Drops Sharply as Chip Curbs Weigh on Tech Stocks

U.S. stocks are down sharply Wednesday at the mid-session, dragged lower by semiconductor losses after Nvidia warned of steep charges tied to new export restrictions to China. The Nasdaq Composite sank over 2%, with the S&P 500 and Dow also in the red, as traders reassessed the outlook for Big Tech following cautious comments from Fed Chair Jerome Powell.

Why Are Chip Stocks Leading the Selloff?

Semiconductor names were under heavy pressure after the U.S. Commerce Department imposed new licensing rules on advanced AI chip exports to China. Nvidia said the restrictions will result in a $5.5 billion quarterly charge, sending shares down more than 7%. AMD also fell over 7%, forecasting an $800 million hit from the same policy.

The broader chip space followed suit. The VanEck Semiconductor ETF dropped more than 4%, while ASML slid 5% after flagging reduced demand visibility due to tariffs. The SOX index lost 3.5% in midday trade.

How Is Broader Tech Reacting?

Tech losses extended beyond chips. Meta, Microsoft, and Tesla each dropped more than 2%, with Tesla under additional pressure after reports said tariffs on Chinese parts could delay its electric truck production.

The information technology sector fell over 4%, its sharpest drop among the S&P 500’s 11 sectors. With Big Tech carrying increased weight in major indexes, traders are seeing amplified moves both ways during earnings season.

Are Any Sectors Holding Up?

Energy emerged as the only strong sector, with the S&P 500 energy group rising nearly 2% thanks to stable crude prices. Stocks like Apache and Devon Energy posted gains of 4% or more. Real estate edged higher, while defensive names in utilities were slightly lower.

What’s the Market Outlook?

Powell’s mid-session remarks added to market jitters after he signaled that trade-related uncertainty could complicate the Fed’s decision-making process. While not ruling out future cuts, he noted the central bank is looking for clearer signals before adjusting policy. Traders currently see just an 18% chance of a rate cut at the next meeting.

With chips under regulatory pressure and tech broadly underperforming, short-term sentiment remains fragile. Traders should watch for additional trade announcements, upcoming earnings reports, and macro data for signs of market direction.

More Information in our Economic Calendar.