Nasdaq records worst day in 2 years as chip stocks crash; Nvidia down 6.6%, Meta drops 5.6%

The tech-heavy Nasdaq Composite index recorded its worst day in two years on Wednesday, as chip stocks crashed over the possibility of curtailment in trade with China. Among the top losers was Nvidia, the leading AI chipmaker which sees China as a key market for its revenue.

Nvidia closed at $117.97 per share on Nasdaq, down sharply by 6.64% as against the last closing price. iPhone-maker Apple, which recently trumped Microsoft to become the world’s most valuable listed entity, dropped 2.53% to close at $228.88 apiece.

Microsoft also settled in the red, closing 1.33% lower at $443.52 per share. Among the most hammered stocks was Meta, the Instagram and Facebook parent, which declined by 5.68% to settle at $461.99 apiece.

A day earlier, on July 16, news agency Bloomberg reported that the Joe Biden administration is considering to further tighten trade ties with China if the country continues to gain access to advanced semiconductor technology manufactured in America.

The US government may reimpose a provision in the law – Foreign Direct Product Rule (FDPR) – first introduced in 1959 that allows the US government to restrict the trade of technology that is manufactured on American soil, the report said, citing sources.

Nasdaq drops below 18,000

The plunge in tech stocks led to Nasdaq closing at 17,996.92, as it shed over 512 points or 2.77%. This was the lowest at which the Nasdaq closed since December 2022.

S&P 500, whose performance is also significantly linked to tech stocks, closed 78.93 points or 1.39% lower at 5,588.27. Among the 11 sectors of S&P 500, technology and communications faced a steep decline, whereas consumer staples significantly gained.

Meanwhile, the Dow Jones Industrial Average emerged as the gainer, with the index rising by 243.60 points or 0.59% to close at 41,198.08. The rally was Johnson & Johnson and UnitedHealth Group, which rose by 3.69% and 4.45%, respectively.