U.S. stocks were poised for a steep pullback from record highs on Wednesday as technologies came under twin pressure from concerns over U.S. export sanctions on China and Donald Trump’s stance on Taiwan.
Futures for the tech-heavy Nasdaq 100 (NQ=F) fell 1.4%, while S&P 500 futures (ES=F) fell 1%. Dow Jones Industrial Average futures (YM=F) fell 0.3% after the blue-chip index surged 700 points to an all-time high on Tuesday.
Stocks retreated as worries about risks to tech names faded as high hopes for interest-rate cuts fueled a rally in recent days. Those concerns weighed on the heavyweights, whose AI-fueled gains helped propel the S&P 500 to new record highs this year, with chipmaker Nvidia ( NVDA ) down more than 4% in premarket trading.
Despite existing export restrictions, the Biden administration has told allies it will impose tougher restrictions on companies that still make advanced chip technology available to China. Bloomberg reported. Shares of ASML (ASML, ASML.AS), cited as a potential target, fell more than 8% after the Dutch chip gear maker posted solid quarterly earnings.
Meanwhile, Republican candidate Trump questioned US security support for Taiwan Bloomberg interview, The island, which is claimed by China, suggested that the United States should pay for its protection. Shares of chipmaker TSMC (TSM, 2330.TW) fell nearly 5% in pre-market trading in New York, as stocks in Taiwan wiped out $30 billion in market value.
Fresh corporate results could turn the tide, as quarterly earnings in many sectors came in better than expected in the early days of the season. Johnson & Johnson ( JNJ ), United Airlines ( UAL ) and Discover ( TFS ) are on Wednesday’s docket.
Data on housing starts and industrial production are also on deck, and the release of the Federal Reserve’s beige book could provide inputs for investors calculating the odds of a second rate cut in 2024.
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