US stocks tumbled on Wednesday with tariff fears returning to Wall Street in earnest, as Nvidia (NVDA) revealed costly new curbs on chip exports to China and Fed Chair Jerome Powell warned of the “challenging” impacts to come from the uncertainty around President Trump’s trade policy.
The benchmark S&P 500 (^GSPC) dropped more than 2.2% while the Dow Jones Industrial Average (^DJI) shed roughly 700 points, or around 1.7%. The tech-heavy Nasdaq Composite (^IXIC) fell over 3% as the new chip provisions weighed on the tech sector.
Stocks hit session lows on Wednesday afternoon as Powell said during a speech in Chicago that the central bank will “wait for greater clarity” before considering any interest rate adjustments. He said he expects Trump’s tariffs to generate “higher inflation and slower growth.”
“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell said.
Meanwhile, AI chip giant Nvidia also found itself caught in the crossfire of the burgeoning US-China trade war. Shares fell about 7% after the company revealed that the US government has imposed new restrictions on its chip exports to China. The company said the move would result in $5.5 billion in charges.
In an exclusive interview with Yahoo Finance on Tuesday, Treasury Secretary Scott Bessett said he expects to see “substantial clarity” on tariffs with major US trading partners, excluding China, over the next 90 days. For its part, China said Wednesday it is open to US talks, but only under certain conditions.
Meanwhile, consumers are already responding to the tariffs. Census Bureau data Wednesday showed retail sales rose more than 1.4% in March, the biggest clip in over two years, as consumers “front-loaded” purchases ahead of anticipated tariffs.
In commodities, gold (GC=F) reached a new record as the escalating trade war continues to push investors toward safe havens.
