US stocks are set to fall sharply from record highs on Wednesday, with tech shares coming under double pressure from concerns over US export controls on China and President Donald Trump’s stance on Taiwan.
Futures for the tech-heavy Nasdaq 100 (NQ=F) led the decline, dropping 1.2%, while S&P 500 futures (ES=F) were down 0.7%. Dow Jones Industrial Average futures (YM=F) were down about 0.2% after the index surged 700 points on Tuesday to hit a record high.
Stocks are falling as concerns about risks to tech stocks outweigh hopes for interest-rate cuts that have fueled gains in recent days. Those concerns weighed on big names whose AI gains have helped propel the S&P 500 to record highs this year, with chipmaker Nvidia (NVDA) down more than 3% in premarket trading.
The Biden administration has told allies it is considering imposing tougher restrictions on companies that continue to supply advanced semiconductor technology to China despite existing export controls, Bloomberg reported. Shares in Dutch semiconductor gear maker ASML (ASML.AS), which has been named as a potential target, fell about 7% after the company reported strong quarterly results.
Meanwhile, presidential candidate Trump, in an interview with Bloomberg, questioned U.S. defense assistance for Taiwan, suggesting that Taiwan, which China claims as its territory, should pay for U.S. defense. Shares of semiconductor maker TSMC (TSM, 2330.TW) fell more than 3% in premarket trading in New York, wiping nearly $30 billion off its market capitalization as Taiwan’s stock price tumbled.
A series of corporate earnings reports could turn the tide, given that several sectors have posted better-than-expected quarterly profits earlier in the season. Johnson & Johnson (JNJ), United Airlines (UAL), and Discover (DFS) are due to report on Wednesday.
Also due is data on housing starts and industrial production, as well as the release of the Federal Reserve’s Beige Book, which may provide investors with information to calculate the likelihood of a second rate cut in 2024.
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