Nasdaq Falls Over 2% on Chip Stock Rout and China Trade Fears
US stocks saw mixed performance on Wednesday amid concerns over potential tighter US export restrictions on China and comments from former President Donald Trump regarding Taiwan. The Nasdaq Composite dropped by nearly 2%, reaching a two-week low, while the S&P 500 also saw a significant decline. The Dow Jones Industrial Average managed a slight gain, buoyed by a 2.7% rise in Johnson & Johnson shares following better-than-expected second-quarter results, and a 3% gain in Intel.
The Biden administration is reportedly considering imposing stricter trade curbs on companies providing advanced semiconductor technology to China. This led to a 3.5% drop in semiconductor stocks, with Taiwan Semiconductor Manufacturing shares falling 6.4%. The S&P 500 technology index experienced a 2.7% decline, while the energy sector emerged as the top gainer, up 1.3%.
The small-cap Russell 2000 index also dipped 0.2% after a recent rally. Meanwhile, homebuilder stocks declined following new government data showing a 3% increase in housing starts in June, driven mainly by multifamily construction. However, single-family starts and permits continued to fall, marking the fifth consecutive monthly decline. Shares of DR Horton, Lennar, and Toll Brothers all saw slight decreases following the report.
