Nvidia Dragging Wall Street Down

By STAN CHOE AP Business Writer

NEW YORK (AP) — Nvidia is dragging Wall Street down on Wednesday after it said new restrictions on exports to China will chisel billions of dollars off its results, while companies around the world say President Donald Trump’s trade war is making it difficult to forecast how they or the economy will do this year.

The S&P 500 was 1.2% lower in midday trading and erasing its gain from earlier in the week. The Dow Jones Industrial Average was down 175 points, or 0.4%, as of 11:45 a.m. Eastern time, while the slide for Nvidia and other stocks in the chip industry sent the Nasdaq composite to a market-leading loss of 2.1%.

Nvidia was the heaviest weight on the market and dropped 7% after it said the U.S. government is restricting exports of its H20 chips to China, citing worries that they could be used to build a supercomputer. The restrictions could mean a hit of $5.5 billion to Nvidia’s results for the first quarter, covering charges related to inventory and purchase commitments.

China and the United States, the world’s two largest economies, have been locked in a trade war and raising tariffs and other impediments to trade with each other.

Rival chip company Advanced Micro Devices sank 6.6% after it said U.S. limits on exports of its own chips to China may mean a hit of up to $800 million for inventory and other charges.

In Amsterdam, ASML’s stock sank 5.2%. The Dutch company, whose machinery makes chips, said demand for AI is continuing to drive growth. “However, the recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while,” CEO Christophe Fouquet said. ASML also gave a forecast for revenue in the upcoming quarter that fell short of analysts’ expectations.

The uncertainty around Trump’s trade war has been scrambling plans for companies across industries and around the world. It’s so dynamic that United Airlines gave two different financial forecasts for how it may perform this year, one if there’s a recession and one if not. The airline said it gave the twin forecasts because it believes it’s “impossible to predict this year with any degree of confidence.”

United’s stock rose 2.2% after it also reported a stronger profit for the latest quarter than analysts expected and said bookings for premium cabins and for international flights are growing.

Better-than-expected profit reports helped some health care stocks rally, which likewise gave U.S. indexes some support. Abbott Laboratories rose 5.4% after it said it’s also standing by previously announced financial forecasts for the full year.

Many investors along Wall Street are bracing for a possible recession because of Trump’s tariffs, which he has said he hopes will bring manufacturing jobs back to the United States and trim how much more it exports to other countries than it imports. A survey of global fund managers by Bank of America found expectations for recession are at the fourth-highest level in the last 20 years.

The World Trade Organization said Wednesday it expects tariffs to result in a 0.2% decline in the volume of world merchandise trade for 2025. That’s if the tariff situation remains as it was on Monday. Trade could shrink by 1.5% this year if conditions worsen, the WTO said.

The “enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, the most vulnerable economies in particular,” Director-General Ngozi Okonjo-Iweala said.

One U.S. company that moves freight, J.B. Hunt Transport Services, tumbled 7.6% for one of Wall Street’s sharper losses even though it reported slightly stronger profit for the latest quarter than analysts expected.

Tariffs could also drive up inflation, at least temporarily, by pushing U.S. importers to pass along the higher costs to their customers.

Fears about such price rises drove a spending binge last month, and sales at U.S. retailers accelerated by more than economists expected. Growth surged to 1.4% in March from February, up from 0.2% the prior month. Economists said much of that was likely because of U.S. shoppers rushing to buy automobiles, electronics and other items before their prices could rise due to possible tariffs.

Recent surveys have shown U.S. households are feeling more pessimistic about the economy because of tariffs, and a fear is that it could lead them to pull back on their spending eventually, which could cause a recession by itself.

Treasury yields eased in the bond market. The yield on the 10-year Treasury fell to 4.30% from 4.35% late Tuesday and from 4.48% at the end of last week. Its swift rise last week had rattled the market and Trump himself, suggesting that investors worldwide may no longer see U.S. government bonds as safe-haven investments because of the trade war.

In stock markets abroad, indexes fell across much of Europe and Asia.

Stocks dropped 1.9% in Hong Kong, 1% in Tokyo, 1.2% in Seoul and 0.3% in Paris.

The FTSE 100 rose 0.1% in London after the government said inflation in the U.K. fell for the second month running in March, largely as a result of lower gas prices.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.