U.S. stocks were poised to fall sharply from Wednesday’s record highs as technology companies were pressured by concerns about U.S. export curbs to China and Donald Trump’s stance on Taiwan.
Futures on the tech-heavy Nasdaq 100 (NQ=F) led the declines, falling 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 rose 700 points on Tuesday to close at a record high.
Stocks are retreating as concerns about risks to tech names overshadow the high expectations for rate cuts that have fueled the rally in recent days. Those worries weighed on heavyweights whose AI-powered profits have helped the S&P 500 to new record highs this year, with chipmaker Nvidia (NVDA) down more than 4% in premarket trading.
The Biden administration has told allies it wants to impose tighter restrictions on companies that continue to make advanced chip technology available to China despite existing export curbs, Bloomberg reported. Shares of ASML (ASML, ASML.AS), mentioned as a potential target, fell more than 8% after the Dutch chip gear maker posted solid quarterly results.
Meanwhile, Republican candidate Trump questioned U.S. defense aid to Taiwan in an interview with Bloomberg, suggesting the Chinese-claimed island should pay for U.S. protection. Shares of chipmaker TSMC (TSM, 2330.TW) fell nearly 5% in premarket trading in New York, wiping out nearly $30 billion in market value in Taiwan as shares fell there.
A fresh batch of corporate results could turn the tide, as quarterly profits across multiple sectors beat expectations in the early days of the trading season. Johnson & Johnson (JNJ), United Airlines (UAL) and Discover (DFS) are on Wednesday’s schedule.
Also on the agenda are data on housing starts and industrial production, plus the release of the Federal Reserve’s Beige Book, which could give investors input as they calculate the likelihood of a second rate cut in 2024.
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