'Magnificent 7' Push Wall Street Into Red After Trade Tensions Escalate With China

The historically strong rally on Wall Street came to an abrupt halt on Wednesday when concerns over possibly escalating trade tensions with China caused chip company stocks to drop. Indexes saw their worst day in months as a result.

After reaching an all-time high for the 38th time this year, the S&P 500 fell 1.4 per cent per day. Nvidia and other major tech companies suffered losses, which caused the Nasdaq composite to fall 2.8 per cent, the most since 2022.

Despite this, there were still slightly more rising than falling stocks in the S&P 500, and the Dow Jones Industrial Average increased by 243 points, or 0.6 per cent, to reach a record set the day before.

Magnificent 7 Stocks

The "magnificent seven", consist of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

The group of seven tech stocks led by Apple (AAPL.O) and Nvidia (NVDA.O) pulled the Nasdaq down 2.8 per cent.

Individually, Microsoft lost more than 1 per cent hovering around 4.43 per cent, Mark Zuckerberg-led meta platforms fell 5.7 per cent and were trading around USD 461.99 at closing.

Apple lost more than 2.5 per cent on the bourses and slid down to settle at USD 228.88. Delivery giant Amazon saw a sharp 2.64 per cent decline, which led the share price to drop to USD 187.93 per share.

Popular search engine 'Google' owning Alphabet saw a 1.55 per cent downward move, the share price closed at USD 182.62 on Wall Street. Chip behemoth 'Nvidia' closed at USD 117.97, slipping 6.64 per cent on the US bourses. EV car pioneer Tesla saw a big drop of 3.14 in their share price, the counter slid down and closed at USD 248.50.

The china-chip issue

The Foreign Direct Product Rule (FDPR), an incredibly strict export control measure, has been proposed by the Biden administration as a way to prevent China from obtaining advanced chipmaking equipment.

The move may make it much more difficult for businesses like Tokyo Electron of Japan and ASML, a Dutch company, to sell goods to China.

Following the revelation, ASML's shares on the European market fell 7.95 per cent to USD 984 (EUR 900) on Wednesday, while its shares on the NASDAQ plummeted almost 8 per cent to USD 983 in pre-market trading.