U.S. stocks looked set to drop on Wednesday after chip maker Nvidia said it would now require a license to export its graphics processing units to China, giving investors yet another reason to worry about trade tensions between Beijing and Washington.
Futures tracking the Dow Jones Industrial Average slid 351 points, or 0.9%. S&P 500 futures fell 1.5% while contracts tied to the tech-heavy Nasdaq 100 tumbled 2.3%.
Nvidia said in a filing late Tuesday that it would record a $5.5 billion charge on its quarterly earnings, as the U.S. government will now require a license to export its H20 chips to China. Its shares dropped 6.3% after the closing bell.
After a few sessions of relative calm, the curbs appear to have stoked investors’ worries about President Donald Trump’s trade policies. The White House also said Tuesday that it would open an inquiry that could result in tariffs on rare-earth minerals that are used in the manufacturing of a vast array of electrical goods, which will be doing nothing to ease the market’s fears.
The latest developments “reminded investors about the ongoing risks of escalation, raising fears that the trade war could still get worse from here… While there had been optimism after the weekend news on tariff exemptions for electronics, there’s been no sign since of either the US or China backing down,” Deutsche Bank macro strategist Henry Allen wrote in a research note.
Economic data could also move markets Wednesday, with February retail sales numbers likely to give investors a sense of how consumer spending is holding up amid the tariff fears. Federal Reserve Chair Jerome Powell is also set to give a speech discussing the central bank’s economic outlook.
Bond yields were retreating in early trading despite the fresh tariff concerns. The yield on the 10-year U.S. Treasury note slid 3 basis points to 4.305%, and the 2-year yield fell 6 basis points to 3.801%.