Stocks Slide, Led by Nvidia’s Big Decline on New US Export Controls

US technology stocks continued to decline on Wednesday, with losses driven by the fallout from tech giant Nvidia’s NVDA warning that fresh export restrictions imposed by the United States could cost it $5.5 billion. Its shares closed 6.9% lower, paring losses that exceeded 10% at one point in afternoon trading. Meanwhile, chipmaker Advanced Micro Devices AMD, which will also be subject to the new controls, fell 7.4%.

Adding to the woes on Wall Street were cautionary remarks from Federal Reserve chair Jerome Powell, who emphasized that the Trump administration’s tariffs could exacerbate inflationary pressures and stunt economic growth. That could dent a labor market that has thus far remained resilient and force central bankers to prioritize one of their two primary objectives—low inflation and stable employment—over the other.

Powell again made it clear that the central bank is not in a hurry to ease policy by cutting interest rates, even as markets whipsaw and the outlook for economic growth worsens. “For the time being, we are well-positioned to wait for greater clarity before considering any adjustments to our policy stance,” he said.

The Morningstar US Market Index closed 2.1% lower on Wednesday. The S&P 500 lost 2.2%, while the technology-heavy Nasdaq composite index plunged 3.1% lower, reflecting ongoing fragile sentiment in that sector. The Morningstar US Technology Index was down 3.5%—the worst performance out of all 11 sectors. Only the energy sector remained in the green for the day.

The Stoxx Europe 600 Index closed 0.2% lower as investors reacted negatively to the latest news. That sentiment proved contagious for Dutch semiconductor equipment company ASML Holding ASML, whose stock was down more than 7%.

“Today there is a renewed focus on trade tensions and the consequences of tariffs on supply chains and company earnings,” says Nicolo Bragazza, associate portfolio manager at Morningstar Investment Management. “Additionally, as per the White House’s statement, tariffs on China are now 245%. These fears have been also reinvigorated by ASML’s net bookings miss and by the company mentioning increasing uncertainty regarding tariffs and the broader macroeconomic landscape.”

Fair Value Estimate Lowered for Nvidia Stock

In the wake of the latest news on Nvidia, Morningstar analysts have lowered their fair value estimate for the company’s stock to $125 per share from $130, reflecting expectations of significantly lower revenue from China.

“China has shrunk to about 10% of Nvidia’s revenue from 20%, and we now expect it to go to close to zero and we don’t foresee a turnaround any time soon,” says Morningstar equity strategist Brian Colello. “Tariffs and geopolitical tensions remain a near-term and long-term concern for Nvidia and other chipmakers, while the future of AI expansion isn’t crystal clear either. These factors, among others, underpin our Uncertainty Rating of Very High.” Colello says he expects more clarity on the new export restrictions when Nvidia releases its quarterly earnings results in late May.

US Dollar Slides, Bond Yields Steady

In currency markets, the US dollar continued its fall against the euro. One dollar now trades at EUR 0.88, while one euro buys $1.14. The yield on the 30-year US Treasury note fell slightly to 4.29%. Market watchers have been keeping a close eye on volatility in the bond market, which could indicate a loss of confidence among global investors in the safe-haven status of American government debt.

“Despite the dollar selloff and renewed risk aversion, the US Treasuries bond market so far is trading as you’d expect with yields lower, although the 30-year yield is close to unchanged suggesting still fragile sentiment,” says Derek Halpenny, head of research, global markets EMEA and international securities at MUFG.

“Efforts have been made to shore up confidence in the bond market. Yesterday’s comments from US Treasury Secretary Scott Bessent may have helped,” Halpenny added. “[Scott] Bessent stated that the Treasury has ‘a big toolkit that we can roll out,’ such as restarting programs buying up older, less-liquid bonds to help liquidity and improve market-making conditions.”