Nasdaq 100 Suffers Worst Day In 11 Months As Chipmakers Tumble On China Curbs; Magnificent 7 Wipe Out $500B : What's Driving Markets Wednesday?

It’s deep red on Wall Street on Wednesday, with tech stocks sharply falling amid a semiconductor broad-based selloff following news that the Biden administration is hastening export restrictions to China.

Bloomberg reported on Wednesday that the U.S. administration has advised its allies to impose the strictest trade restrictions possible if companies such as Tokyo Electron Ltd. TOELY and ASML Holding NV ASML persist in supplying advanced chips to China. Shares of the Dutch chipmaker ASML Holding fell nearly 12%, notching the worst decline since March 2020.

The tech-heavy Nasdaq 100 tumbled by 2.7% at 12:45 p.m. ET, marking the worst session since late August 2023. The semiconductor industry was the hardest hit. The iShares Semiconductor ETF SOXX and the VanEck Semiconductor ETF SMH both plummeted over 6%, marking their worst day since October 2022.

The elite group of the ‘Magnificent Seven,’ tracked by the Roundhill Magnificent Seven ETF MAGS, saw a collective market cap loss of $500 billion in a single trading session. Nvidia Corp. NVDA alone plummeted 7%, accounting for a $180 billion loss.

The S&P 500 dropped 1.2%, while blue-chip stocks of the Dow Jones rose 0.6% to 41,200 points, extending their all-time highs and marking a sixth consecutive session of gains. Meanwhile, small caps took a breather, with the Russell 2000 index falling 1%, ending a five-day winning streak.

U.S. natural gas futures fell over 6%, hitting two-month lows, due to lower-than-expected cooling demand amid milder weather forecasts for the next two weeks.

Oil prices rallied 1.9% after U.S. inventories declined again last week. Gold edged down 0.5% from the all-time highs reached on Tuesday. The dollar fell 0.4%, with the dollar-yen pair dropping 1.3%.

Bitcoin BTC/USD eased 1.2%.

Wednesday’s Performance In US Major Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 1.4% lower to $557.02.
• The SPDR Dow Jones Industrial Average DIA rose by 0.4% to $411.20.
• The tech-heavy Invesco QQQ Trust (ARCA: QQQ) eased 2.7% to $482.82.
• Sector-wise, the Consumer Staples Sector SPDR Fund XLP outperformed, up by 1.3%, while the Technology Select Sector SPDR Fund XLK lagged, down 3.6%.

Wednesday’s Stock Movers

• Advanced Micro Devices Inc. AMD tumbled 8.3%, dropping below the 50-day moving average support.
• U.S.-listed shares of Taiwan Semiconductor Manufacturing TSM plummeted 7% following reports that U.S. presidential candidate Donald Trump suggested Taiwan should compensate the U.S. for its defense.
• British chipmaker Arm Holdings plc ARM tumbled 8.7%.
• Other chip giants, including Marvell Technology, Inc. MRVL, Lam Research Corporation LRCX and Applied Materials, Inc. AMAT, also saw declined by about 8%.
• Johnson & Johnson JNJ rallied 3.7% on stronger-than-expected quarterly results.
• Charles Schwab Corp. SCHW plunged 9.4%, following a 10.2% drop on Tuesday, as several analysts lowered their price targets in response to disappointing Q2 earnings.
• Other stocks reacting to company earnings were Elevance Health Inc. ELV, down 6.5%, U.S. Bancorp USB, up 4.6%, Ally Financial Inc. ALLY, down 3%, Northern Trust Corp. NTRS, down 7%, Citizens Financial Group CFG, up 3.4% and Synchrony Financial SYF, up 0.6%.
• Companies reporting after the close include Alcoa Corporation AA, Discover Financial Services DFS, Kinder Morgan, Inc. KMI, SL Green Realty Corp. SLG, Steel Dynamics, Inc. STLD and United Airlines Holdings, Inc. UAL.

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Image created using artificial intelligence via Midjourney.