Nasdaq Tumbles Over 2% Amid China Trade Curbs, Dow Reaches Record High

The Nasdaq dropped over 2% due to concerns about U.S. trade restrictions on China, leading to a decline in tech and chip stocks. In contrast, the Dow reached a record high, supported by strong performances from Johnson & Johnson and UnitedHealth Group. The tech sector led declines, while the energy sector saw gains.

The Nasdaq tumbled more than 2% to a two-week low on Wednesday, driven down by megacap chip and tech stocks amid the prospect of tighter China-focused U.S. trade curbs. In stark contrast, the Dow Jones Industrial Average bucked the trend, touching an intraday record high.

A report indicating the Biden Administration might implement severe trade restrictions against China caused semiconductor stocks to plummet, with the Philadelphia SE Semiconductor index spiralling 4.9%. AI-chip leader Nvidia fell 6.2%, ASML's U.S.-listing dropped 11.4%, and Taiwan Semiconductor Manufacturing's U.S.-listed shares shed 6.4%.

The broader slump in stocks followed a strong rally in tech companies earlier this year and recent gains in small-cap stocks. While the S&P 500 Tech index led sectoral losses, energy stocks gained 1.1%. The Dow's ascent was supported by Johnson & Johnson and UnitedHealth Group rising 3.3% and 4% respectively. Apple, Amazon, Meta Platforms, and Tesla fell between 2.6% and 4.1%.

(With inputs from agencies.)