Wall St tumbles, Nvidia drops after new US chip export curbs

Wall Street's main indexes slid on Wednesday, with chipmakers leading declines as Nvidia warned of steep charges from new US curbs on its chip exports to China, making it one of the biggest casualties of the trade war between the two countries.

Global chip stocks took a battering as US President Donald Trump's shifting trade policy appeared to muddy the outlook for semiconductor and computing giants, including Nvidia (NVDA.O) and AMD (AMD.O).

The US Commerce Department late on Tuesday issued new export licensing requirements for Nvidia's H20 and AMD's MI308 artificial-intelligence chips to China. Nvidia said it faces $5.5 billion in charges after the restrictions, while AMD said it expects an $800 million hit.

Shares of both companies slumped, with Nvidia down 5.5 per cent and AMD shares losing 5.7 per cent. Other chip stocks also lost ground, with Micron Technology (MU.O) down 2.5 per cent and Broadcom (AVGO.O) falling 3.1 per cent.

At 09:39 am, the Dow Jones Industrial Average (.DJI) fell 132.38 points, or 0.33 per cent, to 40,236.58, the S&P 500 (.SPX),  lost 46.16 points, or 0.86 per cent, to 5,350.47, and the Nasdaq Composite (.IXIC),  lost 275.23 points, or 1.64 per cent, to 16,547.94.

The information technology sector (.SPLRCT) fell 2.6 per cent, while the broader semiconductor index (.SOX) was down 3.3 per cent.

The CBOE volatility index (.VIX) Wall Street's "fear gauge," ticked up 0.58 points to 30.70 after falling for the last three sessions.

The export controls are the newest attempt from the Trump administration to keep advanced semiconductors from being sold to China.

"It's going to create a lot of uncertainty for companies in terms of (the) decisions they make," said Chris Zaccarelli, chief investment officer, Northlight Asset Management.

"I would expect investors to be slightly less willing to buy stocks of chipmakers, technology companies and things like that until they have a more clear picture as to what the final rules of the road will be."

Investors will closely monitor a speech by US Federal Reserve Chair Jerome Powell later in the day for indications on how the central bank will respond to the market's volatility as well as growth worries.

Traders see an 18 per cent chance the Fed will ease rates by 25 basis points at its May meeting, according to CME's FedWatch.

Separately, Trump ordered an investigation into potential new tariffs on all critical minerals imports.

Data showed March retail sales rose 1.4 per cent, higher than expected. However, that did little to lift sentiment.

The stronger data was likely due to consumers trying to buy products ahead of the implementation of tariffs, Zaccarelli said.

Amid growth worries, investors are hawk-eyed about the outlook from companies this earnings season.

United Airlines (UAL.O) gained 2.5 per cent after the company reported stable bookings despite forecasting lower profit for the current quarter.

Tesla (TSLA.O) fell 1.5 per cent after Reuters reported that Trump's tariffs on Chinese parts had disrupted the EV-maker's production plans.

Declining issues outnumbered advancers by a 1.17-to-1 ratio on the NYSE, and by a 1.54-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and one new low, while the Nasdaq Composite recorded six new highs and 41 new lows.