Market Recap: Wall Street Tumbles as Chip Stocks Lead Decline Amid China Export Controls

Major Indexes Retreat as Tech Sector Faces Pressure

Wall Street experienced a significant downturn on Wednesday, April 16, 2025, as major indexes retreated amid concerns over new export controls affecting semiconductor companies. The S&P 500 dropped 2.45% to 5,264.32, while the tech-heavy Nasdaq Composite plunged 3%, dragged down by semiconductor stocks. The Dow Jones Industrial Average fell 1.4% to close at 40,368.96, shedding 155.83 points from the previous session.

Chip stocks led the market decline after Nvidia (NVDA) announced it would take a $5.5 billion charge related to new export restrictions on its H20 graphics processing units to China. Nvidia shares tumbled more than 7%, while Advanced Micro Devices (AMD) plunged about 7% after revealing it expects to incur costs up to $800 million from similar export controls.

“Both countries seem to believe they have the upper hand, potentially prolonging the current stalemate for months to come,” analysts at PGIM Fixed Income noted regarding the ongoing trade tensions between the US and China.

Broader Market Impact and Economic Indicators

The semiconductor sector’s troubles spread throughout the technology industry, with the VanEck Semiconductor ETF falling more than 5%. Other major tech companies also felt the pressure, with Meta Platforms (META), Alphabet (GOOGL), and Tesla (TSLA) each losing approximately 2%, while Amazon (AMZN), Microsoft (MSFT), and Apple (AAPL) declined about 1%.

Despite the market downturn, there were some positive economic indicators. U.S. retail sales rose 1.4% in March, matching forecasts and representing the best reading in over two years. This data suggests consumer resilience ahead of the recent tariff announcements.

Federal Reserve Chair Jerome Powell warned that Trump’s tariffs would likely “generate at least a temporary rise in inflation” and that these effects could “also be more persistent,” creating what he described as a “challenging scenario” for the economy.

Global Market Reaction

The impact of U.S. chip export restrictions reverberated through global markets. Asian semiconductor stocks suffered significant losses, with South Korean companies Samsung Electronics and SK Hynix falling about 4%, while Taiwan Semiconductor Manufacturing Company (TSMC) dropped 2.5%.

European markets also declined, with the regional Stoxx 600 index slipping 1% in early trading. Dutch semiconductor equipment maker ASML fell 5.2% after reporting orders of €3.94 billion in its first quarter, about €1 billion less than expected. CEO Christophe Fouquet noted that tariffs had “increased uncertainty in the macro environment.”

Upcoming Market Events

Investors are closely watching several key earnings releases scheduled for the remainder of the week. Wednesday saw reports from ASML Holding (ASML), Abbott Laboratories (ABT), and US Bancorp (USB), among others.

The Travelers Companies (TRV) and First Horizon Corporation (FHN) reported before market open, while companies including Liberty Energy (LBRT), Cohen & Steers (CNS), and F.N.B. Corporation (FNB) are set to release earnings after market close.

Safe Haven Assets Surge

As market uncertainty grows, investors are turning to traditional safe-haven assets. Gold reached a new record high, pushing past $3,300 an ounce for the first time, representing a 2.33% increase as the escalating trade tensions drive demand for the precious metal.

Oil prices also rose amid hopes of trade talks between China and the US, with Brent crude increasing by 1.3% to $65.49 a barrel.

Looking Ahead

Market participants will be closely monitoring developments in the ongoing trade dispute between the US and China, particularly any potential negotiations. Treasury Secretary Scott Bessett stated he expects to see “substantial clarity” on tariffs with major US trading partners, excluding China, over the next 90 days.

Additionally, investors will be analyzing upcoming economic data and further earnings reports to gauge the broader impact of trade tensions on corporate profits and economic growth as the first quarter earnings season continues to unfold.