U.S. stocks trimmed early gains on Wednesday as investor optimism over renewed U.S.-China trade talks was tempered by lingering concerns over tariffs and new export restrictions on advanced chips. The cautious mood saw the S&P 500 and Nasdaq Composite fall by 1.2% and 2.1% respectively at the open, while the Dow Jones Industrial Average slipped 0.6%.
Chipmakers led the early declines, with Nvidia (NVDA), Advanced Micro Devices (AMD), Micron Technology (MU), and ASML Holding (ASML) all falling sharply in premarket trading. Though the stocks briefly flipped into positive territory ahead of the bell, the broader market remained weighed down by Washington’s intensified tariff campaign against China.
Nvidia’s $5.5 Billion Warning Fuels Volatility
Tensions escalated after the U.S. announced curbs on Nvidia’s exports of AI chips to China, a move that added fresh volatility to the tech sector. Nvidia warned of a potential $5.5 billion quarterly revenue hit, sending NVDA stock tumbling by 6%.
AMD and ASML also registered notable losses, reflecting broader fears over disrupted semiconductor supply chains and reduced market access to China—a critical buyer of advanced tech products.
“AI chip restrictions are not just a regulatory hurdle—they are a multi-billion-dollar redirection of demand,” one analyst noted.
Beijing Signals Willingness—but With Conditions
Markets responded initially to reports that China is open to resuming trade talks with the U.S., despite escalating tariff tensions. Beijing’s willingness to return to the negotiating table comes with the stated condition of “respect” from U.S. counterparts, according to Chinese officials.
While the gesture was seen as a potential thaw in the trade standoff, investors remain wary. The Trump administration recently announced tariff hikes of up to 245% on various Chinese imports, prompting retaliatory measures from Beijing.
“It’s too early to price in optimism,” said a strategist at a leading brokerage firm. “We need more than words—we need policy reversals or real progress.”
Economic Data Mixed; Crypto Dips Slightly
The March retail sales report showed a 1.4% rise, matching market expectations and suggesting underlying consumer strength. However, positive inflation prints earlier in the week failed to provide much upward momentum as investor attention stayed fixed on geopolitics.
Cryptocurrencies also edged lower amid the cautious risk environment, echoing the dip in equities.
Outlook
With escalating tech restrictions, uncertain trade diplomacy, and a mixed economic backdrop, market sentiment remains fragile. While China’s readiness to reengage in talks offers a glimmer of hope, sustained recovery may depend on concrete developments in tariff policy and a de-escalation of tech-related tensions.
