US stocks fall as Nvidia tumbles and trade war uncertainty deepens

A man stands near an electronic board displaying stock prices at the Indonesia Stock Exchange

U.S. stocks dropped on Wednesday after Nvidia said that new export limits to China will cut billions from its earnings, while companies worldwide said President Donald Trump’s trade war is making it harder to predict their performance and the economy’s direction this year.

The S&P 500 fell 2.2%, after earlier dropping as much as 3.3%, which would have ranked among its worst losses before recent chaotic market swings.

The Dow Jones Industrial Average lost 699 points, or 1.7%, and the Nasdaq composite led declines with a 3.1% fall.

Losses grew after Federal Reserve Chair Jerome Powell repeated that Trump’s tariffs may have a bigger impact than expected, possibly slowing the economy and raising inflation more than previously thought. But he added that the Fed needs more time before deciding whether to change interest rates to help the economy or slow inflation.

“All of this is highly uncertain,” Powell said. “We’re thinking now, really before the tariffs have their effects, (about) how they might affect the economy. That’s why we’re waiting really to see what the policies ultimately are, and then we can make a better assessment of what the economic effects will be.”

Some companies are already being hit by policy changes.

Nvidia fell 6.9% after saying U.S. limits on exporting its H20 chips to China, due to fears they might be used to build a supercomputer, could lead to a $5.5 billion loss in the first quarter, including inventory and purchase-related charges.

Advanced Micro Devices dropped 7.3% after reporting that similar export limits might result in a loss of up to $800 million for inventory and other charges.

In Amsterdam, ASML shares fell 5.2%. The chip machinery maker said demand for artificial intelligence remains strong. “However, the recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while,” said CEO Christophe Fouquet.

Trump’s trade war has forced companies across industries to rethink their plans. The impact has been so unpredictable that United Airlines gave two financial forecasts for this year—one assuming a recession and one without.

The airline said it made this unusual decision because it’s “impossible to predict this year with any degree of confidence.”

United’s stock remained mostly unchanged, even after posting stronger profits than expected for the latest quarter.

Many investors are preparing for a possible recession because of the tariffs. Trump has said he wants to bring factory jobs back to the U.S. and reduce the trade gap with other countries.

Trader Dylan Halvorsan in the NYSE

A Bank of America survey of global fund managers showed recession expectations are at their fourth-highest level in the past two decades.

The World Trade Organization said Wednesday that it expects tariffs to reduce global trade volume by 0.2% in 2025 if conditions stay as they were on Monday. If things get worse, trade could shrink by 1.5% this year.

“The enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, the most vulnerable economies in particular,” said Director-General Ngozi Okonjo-Iweala.

One U.S. company hit hard was J.B. Hunt Transport Services, which dropped 7.7%, despite slightly beating profit expectations. The company moves goods across North America.

At the close of trading, the S&P 500 fell by 120.93 points to 5,275.70. The Dow Jones Industrial Average dropped 699.57 to 39,669.39, and the Nasdaq composite fell 516.01 to 16,307.16.

Tariffs may also temporarily push prices higher as U.S. importers pass along added costs to shoppers.

These price fears sparked a rush in spending last month, with retail sales jumping more than economists predicted. Many believe shoppers hurried to buy cars, electronics, and other goods before tariffs made them more expensive.

Surveys show U.S. households are feeling less positive about the economy due to tariffs. This concern could lead them to spend less, which could trigger a recession.

In the bond market, Treasury yields dipped after Powell’s comments. The yield on the 10-year Treasury dropped to 4.28% from 4.35% Tuesday, and down from 4.48% at the end of last week.

It was another sharp move for the bond market, which is settling back after last week’s unusual yield spike shook investors and drew Trump’s attention.

Yields usually fall when economic worries rise. Last week’s increase made some worry that the trade war is making investors rethink how safe U.S. government bonds really are.

Stock markets across Asia fell, and results were mixed in Europe.

Markets dropped 1.9% in Hong Kong, 1% in Tokyo, 1.2% in Seoul, and 0.1% in Paris.

The FTSE 100 in London rose 0.3% after U.K. inflation fell for the second straight month in March, mostly due to lower gas prices.