US markets closed sharply lower on Wednesday, with tech stocks bearing the brunt of investor anxiety over tariff risks and corporate earnings shocks. The Dow Jones Industrial Average dropped nearly 700 points, or 1.73%, to finish at 39,669. The S&P 500 fell 2.24% to 5,275, while the Nasdaq Composite plunged 3.07% to 16,307 — dragging the tech-heavy index closer to bear market territory.
Nvidia warning triggers chip sector retreat
The sell-off was sparked by a stark earnings warning from Nvidia, which announced a US$5.5 billion charge tied to new US export restrictions on its AI chips destined for China and other countries. Nvidia shares sank nearly 7% on the day, while fellow chipmaker AMD lost more than 7% and Micron Technology dropped 2.4%. The VanEck Semiconductor ETF fell more than 4% as chip stocks reeled from the news.
Pressure intensified after reports that the Trump administration is considering a crackdown on Chinese AI startup DeepSeek, one of Nvidia’s key customers. US-listed shares of Dutch chip equipment maker ASML also slumped 7% after disappointing earnings.
Powell’s tariff warning fans stagflation fears
Markets dipped further after Federal Reserve Chair Jerome Powell warned that the White House’s tariff campaign could pose a challenge to the central bank’s policy goals. Speaking in Chicago, Powell said tariffs are “likely to move us further away from our goals” by raising inflation and slowing growth. He added that the Fed may soon face a difficult trade-off between stabilising prices and supporting employment.
Investors are still digesting the impact of President Trump’s tariff regime, which includes a 90-day delay for most countries — though China has been excluded from those exemptions.
Commodities and the dollar
WTI crude is trading 1.86% higher at US$62.47 a barrel.
Spot gold is trading 3.48% higher at US$3,343.12 an ounce.
One Australian dollar is buying 63.72 US cents.
Australia
Turning to Australia, attention today is on a string of quarterly earnings reports from major mining companies, including Alcoa, BHP, Pilbara Minerals, Challenger, and South32. Transurban and AMP are also on the docket.
The SPI futures are pointing to a 26 point fall.
