Tech-heavy Nasdaq drops 2% as chip sale restrictions to China cause semiconductor stocks plunge.

From Mint: 2024-07-17 11:59:11

US technology and semiconductor stocks plunged from all-time highs due to fears of stricter chip sales restrictions to China, causing the Nasdaq to drop nearly 2%. Major chipmakers like Nvidia, AMD, ASML, and Taiwan Semiconductor declined significantly. Market volatility heightened amid concerns of sanctions impacting tech companies reliant on semiconductors.

The $24 billion VanEck Semiconductor ETF fell 4%, with Nvidia, AMD, and Broadcom leading the losses. US-listed shares of Taiwan Semiconductor dropped 6.4% after Trump’s comments on Taiwan. The tech sell-off extended to Marvell, Qualcomm, Micron, and Arm Holdings with over 5% declines each.

Despite strong Q2 orders, ASML sank 9.2%, dragging down the overall tech market. Even the “Magnificent Seven” megacap stocks like Apple, Microsoft, Meta, and Tesla faced losses. S&P 500’s tech index was hit the hardest, dropping 2.7%, while energy stocks surged by 1.3%.

As the tech sell-off continues, investors are advised to consider rebalancing portfolios towards a broader range of AI stocks and sectors. High valuations for tech giants like Nvidia, Microsoft, and Alphabet may pose challenges for the remainder of the year. Diversification and careful selection of stocks are crucial in the current volatile market environment.

Tech companies heavily reliant on semiconductors could face squeezed profit margins due to rising input costs. This could lead to lower stock prices and increased market volatility. It is recommended for investors to seek refuge in safer assets like bonds and gold to minimize exposure to sector-specific risks.

To navigate the uncertain market conditions, investors should focus on diversification and consider companies with strong balance sheets capable of managing supply chain disruptions. With the impact of semiconductors on global markets significant, proactive strategies and risk mitigation are essential for long-term investment success. Always seek advice from certified experts before making any investment decisions.



Read more at Mint: Tech-heavy Nasdaq hits two-week-low; Nvidia, ASML crash 4-8% from all-time high on tighter US trade curbs outlook