U.S. stock markets tumbled on Wednesday as mounting concerns over new export restrictions and the escalating trade war under President Trump sent shock waves through investor sentiment. The S&P 500 plummeted 2.2% after a steep intraday fall near 3.3%, nearly tallying one of its worst sessions in recent memory, underscoring the volatility gripping Wall Street.
The Dow Jones Industrial Average dropped by roughly 700 points, while the Nasdaq led the downturn with a 3.1% loss. The sell-off accelerated following remarks from the head of the Federal Reserve, who cautioned that the tariffs could negatively impact economic growth and spike inflation beyond earlier estimates. “All of this is highly uncertain,” the Fed chair noted, emphasizing that a clearer picture of policy impacts is needed before the economy can be accurately assessed.
Key tech firms bore the brunt of the fallout. Nvidia saw its shares decline by 6.9% after warning that new U.S. government restrictions on exporting its advanced H20 chips to China could dent first-quarter earnings by an estimated $5.5 billion due to inventory adjustments and purchase commitments. Similarly, Advanced Micro Devices (AMD) suffered a 7.3% plunge on news that its own chip exports to China might incur up to $800 million in charges. Even ASML, a leading Dutch supplier of semiconductor manufacturing equipment, felt the pressure with a 5.2% drop despite continued demand growth driven by artificial intelligence trends. ASML’s CEO Christophe Fouquet remarked on the unsettled market dynamics, noting that tariff-related uncertainties would persist for the foreseeable future.
The pervasive trade policy uncertainty is forcing companies globally to shuffle their forecasts. In an unprecedented move, United Airlines released two separate financial projections for this year—one for a recession scenario and another for stable growth—highlighting the unprecedented difficulty in predicting economic outcomes during these turbulent times. Despite reporting stronger-than-expected quarterly earnings, United’s stock remained virtually unchanged.
Investor anxieties now extend well beyond the tech sector. Market participants are bracing for a broader economic downturn potentially triggered by the trade measures, which aim to bolster domestic manufacturing by reducing reliance on foreign imports. A survey conducted by Bank of America among global fund managers revealed that recession expectations are currently at their fourth-highest level in two decades.
The World Trade Organization (WTO) projected that if the current tariff policies continue, global merchandise trade volume could dip by 0.2% in 2025. However, should the situation deteriorate, a contraction of up to 1.5% this year remains a possibility. WTO Director-General Ngozi Okonjo-Iweala warned that prolonged uncertainty could severely curtail global growth, disproportionately affecting the world’s most vulnerable economies.
On the bond market, Treasury yields retreated modestly. The 10-year Treasury yield decreased to 4.28% from its previous levels, partly reversing the earlier surge that had fueled fears over the presumed safety of U.S. government bonds amid the trade war’s ripple effects.
Across global markets, Asian indexes were generally down—with Hong Kong losing 1.9%, Tokyo 1%, and Seoul 1.2%—while European markets saw mixed performances. Notably, the FTSE 100 in London rose by 0.3% following government reports of declining inflation in the U.K., attributed primarily to lower gas prices.