On Tuesday night, U.S. stock futures fell. Investors readied themselves ahead of the next round of important economic readings, including Friday’s retail sales figures. Following Nvidia’s announcement of a significant quarterly charge related to export regulations, market sentiment soured, leading to notable drops in major indices. The Dow Jones Industrial Average is set to increase 1.2% this month. New policy changes in recent months have called into question the future growth potential.
Nvidia’s stock fell more than 6% on the news, as the company disclosed a large $5.5 billion charge. This expense is due to its H20 graphics processing unit being exported to China and other countries. Nvidia’s huge plans take a hit, thanks to U.S. government restrictions. The rules would force the company to get an export license any time chips are shipped to them, including China. The H20 chip alone brought in between $12 billion and $15 billion in revenue for Nvidia last year. It has emerged as a frontline in the broader U.S.-China trade and technology war.
The U.S. government’s decision to impose stricter export regulations signals potential challenges for Nvidia’s overall growth. Investors fear that increasing restrictions could limit the company’s ability to capitalize on international markets, particularly in China, where demand for advanced semiconductor technology remains high.
As of Tuesday evening, Dow futures were down nearly 0.5% a little after 6 p.m. ET. At the same time, S&P 500 futures contracted by 0.9% and Nasdaq 100 futures plunged 1.3%. On the whole, the Dow lost almost 156 points, or 0.4%, and the S&P 500 fell 0.2%. Ever since the Trump administration announced reciprocal tariffs on April 2, the markets tanked. The Dow and Nasdaq were each down nearly 4.4% on the week with the S&P 500 down 4.8%.
Traders will be focusing heavily on the retail sales report to be released Wednesday morning. This report could serve as a market catalyst, providing insight into consumer spending trends and economic health amid ongoing geopolitical uncertainties.
“Fundamentally, things have not been resolved. Fundamentally, the game of chicken between China and the U.S. continues, and other countries are trying to figure out how to navigate this. And fundamentally, the game of chicken between the administration and the Federal Reserve continues,” – Mohamed El-Erian
Investor nerves are frayed with everyone chomping at the bit, salivating over this upcoming retail sales number. Recent developments affecting tech titan Nvidia have only added to this expectation around economic underperformance. The strains in U.S.-China relations are already escalating. Market participants are worried about how these dynamics will play out in the broader economy.
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