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US tech stocks fell sharply on Wednesday, in a fresh jolt of volatility for Wall Street as uncertainty over Donald Trump’s trade tariffs and the health of the world’s biggest economy weighed on investor sentiment.
The Nasdaq Composite was down 1.9 per cent by early afternoon in New York, setting the stage for the technology-heavy index to snap three consecutive days of gains. Chipmaker Nvidia and Elon Musk’s electric-car company Tesla were among the biggest fallers, losing 5.9 per cent and 5.8 per cent respectively.
Wall Street’s broader S&P 500 gauge was down 1.1 per cent.
The White House said on Wednesday afternoon the US president would unveil new tariffs on auto imports later in the day.
These levies are set to be announced a week before Trump plans to reveal a new sweeping tariff regime in an event he has dubbed “Liberation Day”. Next Wednesday’s announcement could include hefty new levies on major US trading partners including Mexico and Canada after the president previously imposed a 25 per cent duty on global imports of steel and aluminium.
Wednesday’s pullback in tech stocks amounted to a “reality check” for markets following gains earlier in the week, as concerns over Trump’s tariffs and weakening consumer sentiment persist, said Peter Tchir, head of macro strategy at brokerage Academy Securities.
“People got too comfortable Monday, but they’re realising that we’re still in a very tricky environment,” Tchir said, referring to the Nasdaq’s 2.3 per cent rally at the start of this week.
Orders for long-lasting US goods rose 0.9 per cent in February from the previous month, the commerce department said on Wednesday, far outpacing expectations in a FactSet poll for a 1 per cent drop. However, economists at investment bank Barclays noted that the rise was fuelled by increases in orders for vehicle parts “amid anticipation of tariff-related disruptions”.
Barclays economists also noted orders for high-cost “capital goods” fell, “hinting that a drag on fixed investment from policy uncertainty could be taking shape”.
Consumer optimism has also exhibited signs of darkening in recent weeks, with data from the Conference Board on Tuesday showing Americans’ outlook about the future sinking to the lowest level in 12 years.
Investors and economists are increasingly raising the alarm about the possibility of a growth slowdown in the US just as Trump’s escalating global trade war pushes prices higher.
“You have continued uncertainty around tariffs, and uncertainty typically means that investors are less forgiving with higher valuation stocks like those in the tech sector,” said Kristina Hooper, chief global market strategist at Invesco.
“But you also have uncertainty about the future of the economy,” she added. “Soft data has become very concerning, and it raises more questions about the risk the US economy goes into recession.”
Federal Reserve policymakers last week slashed their growth forecasts for the US economy, while raising their inflation outlook. The Bureau of Economic Analysis is set to release a fresh report on inflation on Friday.
