This past week, stock markets continued with the previous week’s rebound. By mid-week, the rally ended abruptly. The U.S. government said that Nvidia (NVDA) may not sell H20 graphics chips to China.
NVDA stock fell by up to around 10% before closing down by 6.87% to $104.49.
Macroeconomic conditions are also worsening. China replaced its trade negotiator with WTO envoy Li Chenggang. Considered China’s top trade negotiator, the White House needs to prepare for tough discussions ahead.
The 3% drop in Nasdaq (QQQ) is only a start. Trade war tensions show no signs of easing. Traders may speculate that the White House will reverse its tariffs against China. However, this is no more than a guess. Investors sold bank stocks like Citigroup (C), Bank of America (BAC), and Bank of New York (BK).
The magnificent 7 fell in the 2.93% range and more. Investors sold Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Tesla (AMZN), and Meta Platforms (META).
In the drug sector, Abbott’s (ABT) strong results did not help. AbbVie (ABBV), Amgen (AMGN), Merck (MRK), and Eli Lilly (LLY) fell in Wednesday’s trade.
This broad sell-off is only a start. Fed Chair Jerome Powell said that the central bank may face a dilemma. It needs to balance controlling inflation and supporting economic growth. As a result, it cannot use aggressive interest rate cutting to offset the negative impact of tariffs.