Wall Street opens in red as AI chip controls hit tech stocks

Wall Street opened in red on Wednesday, dragged down by export controls targeting advanced computer chips hit tech stocks hard. The Dow Jones Industrial Average traded at 40,054.81, down 314.15 points or 0.78%. S&P 500 also opened in red, 75.87 points or 1.41% down slipping to 5320.76 at 9:55 ET.

Nasdaq composite also plunged 2.23% or down 374.43 points at 16448.74.

The pre-market saw a significant drop before the opening bell on Wednesday as futures for the S&P 500 dropped by 0.6%, while those for the Dow Jones Industrial Average remained flat. The Nasdaq, heavily influenced by tech companies, saw a significant decline of 1.3%.

Nvidia , a leading chipmaker, fell down 6.5% in premarket trading after the company revealed that the US government had imposed tighter restrictions on the export of one of its AI-focused chips. Rival AMD also faced a setback, with its shares falling 6.8%. The new measures raised concerns over the impact on technology firms that depend on advanced chip sales, particularly in the growing AI market.

United Airlines, on the other hand, registered a jump of more than 7% in the premarket trading, following its outstanding first quarter results, beating Wall Street’s target.

In addition to the export controls, trade war concerns also resurfaced after the Trump administration announced an investigation into imports of critical minerals, including rare earths, which are essential for a range of products such as smartphones and electric vehicles.

Across the Atlantic, European markets also saw losses. The FTSE 100 in the UK dropped 0.3% after news that inflation had fallen for the second consecutive month in March, largely due to a drop in gas prices. Meanwhile, Germany’s DAX slid by 0.7%, and the CAC 40 in Paris lost 0.5%.

Asian markets were similarly affected, with stocks in China leading the declines. Despite a strong 5.4% annual growth rate in the first quarter, China’s economic growth slowed in quarterly terms, prompting concerns among private sector economists.

“Our view is that the tariff shock is caused by the unpredictability rather than the tariff itself. President Trump’s announcements have affected business sentiment and activity," said Raymond Yeung, an economist at ANZ Research.

In Tokyo, the Nikkei 225 index fell 1% while major South Korean and Australian indices also experienced declines. However, India's Sensex saw a modest 0.4% increase, and Bangkok’s SET index climbed 0.9%.

Meanwhile, the US bond market showed signs of stability after last week's turmoil. The yield on the 10-year Treasury remained steady at 4.33%, down from 4.38% on Monday, providing a sense of reassurance to investors.

Oil prices bounced back from early losses, with US benchmark crude gaining 51 cents to $61.84 per barrel, while Brent crude added 53 cents to $65.20. Despite this, expectations that the global economy may slow due to Trump's tariffs have kept a lid on demand for oil.