Tech Stocks Take a Hit: Nasdaq Plummets Amid U.S.-China Trade Tensions

The S&P 500 and the Nasdaq experienced significant losses on Wednesday, driven by plunging microchip shares amid potential U.S.-China trade conflicts. The Biden administration's consideration of stringent trade restrictions against China caused microchip stocks to drop 6.8%, leading to the biggest one-day decline for the Philadelphia SE Semiconductor index since March 2020.

The Nasdaq fell 2.8%, led by losses in Nvidia and Apple, while the S&P 500 dropped 1.4%. Meanwhile, the Dow Jones Industrial Average posted modest gains for the third consecutive day, benefiting from rises in Johnson & Johnson, UnitedHealth Group, and Intel Corp.

Investor anxiety was reflected in the CBOE Market Volatility index, which hit a six-week high. Simultaneously, housing starts and building permits showed surprising strength, and industrial output exceeded expectations. Despite these positive figures, the economic landscape remains uncertain as the Federal Reserve contemplates rate cuts to control inflation.

(With inputs from agencies.)