Tech Stocks Tumble Amid U.S.-China Trade Tensions

The S&P 500 and Nasdaq took a nosedive on Wednesday as microchip shares plummeted, driven by concerns over potential U.S.-China trade conflicts. The Biden administration’s potential severe trade restrictions against China added fuel to the fire for microchip stocks.

A steep decline in momentum tech stocks, particularly Nvidia and Apple, significantly impacted both Nasdaq and S&P 500. In contrast, the Dow Jones Industrial Average, which has recently underperformed, maintained a modest gain and reached its third consecutive record high, thanks to Johnson & Johnson, UnitedHealth Group, and Intel Corp.

Small-cap stocks also felt the pressure, snapping a long winning streak as investor anxiety grew. The CBOE Market Volatility index surged to its highest in six weeks, reflecting the market turmoil. Economic indicators, however, showed resilience with housing starts and building permits exceeding expectations, and industrial output doubling estimates for June, bolstering hopes of a soft economic landing without a severe contraction.

(With inputs from agencies.)