4:13pm: Tech stocks pummelled
The Nasdaq saw its worst trading day since 2022 shedding 2.8% or 512 points at 17,996 points as chip stocks tumbled on fears of tighter restrictions on the export of semiconductors to China.
ASML shed 12.7%, Taiwan Semiconductor Manufacturing Company was down 7.9%, and Nvidia was down 6.6%.
The S&P 500 shed 1.4% at 5,588 while the Dow Jones added 0.6% at 41,198 points, notching its second record high closing price in as many days.
12.20pm: Nvidia, ASML lead losses
US stocks were mixed on Wednesday, with the Nasdaq dropping sharply by about 2.3% due to concerns over US export curbs on China and Donald Trump's comments on Taiwan.
The Dow Jones Industrial Average rose 0.3%, while the S&P 500 fell over 1%.
Heavyweights like Nvidia and ASML saw significant losses amid fears of tougher restrictions on advanced chip technology exports to China. Meanwhile, Intel and GlobalFoundries rose, benefiting from US government initiatives to boost domestic semiconductor manufacturing, as investors rotated out of big tech names into small-cap stocks, with the Russell 2000 outperforming the Nasdaq 100 for five consecutive sessions.
“While today’s Dow and small-cap gains are but a shadow of recent surges, tech stocks are still firmly out of favour, partly thanks to the selloff in TSMC overnight, and no doubt on some pre-earnings nerves,” IG’s Chris Beauchamp commented.
“The Magnificent 7 are widely expected to give way to the ‘other 493’ this time around, as investors finally lose some of their enthusiasm for the big names."
Meanwhile, the NY Fed’s Williams indicated that July is too early for a rate cut, but left the door open for a September cut.
10.26am: Fed speak
We've had some Fed speakers commenting on rates, giving markets more grist to mill over.
Federal Reserve governor Christopher Waller said interest rate cuts are "getting closer", so long as inflation and employment continue to be in line with forecasts.
"I believe current data are consistent with achieving a soft landing, and I will be looking for data over the next couple months to buttress this view,” Waller said.
"So, while I don’t believe we have reached our final destination, I do believe we are getting closer to the time when a cut in the policy rate is warranted."
Elsewhere, Richmond Fed president Tom Barkin said he wanted to “proceed deliberately” on interest-rate moves because it was uncertain how much the current level of interest rates was slowing the economy, as he thought there was still downward pressure on demand in the pipeline because of ”lags” from prior rate hikes.
10.10am: Housing starts and industrial production
There's been a few macroeconomic data releases this morning, including housing starts and building permits, as well as industrial production.
Industrial production increase 0.6% in June, down from a revised 0.9% the month before but above the 0.3% consensus forecast.
Manufacturing production rose 0.4% on the month, also above expectations, which were for a 0.1% increase.
US housing starts came in at 1.353 million for June, versus the 1.300 million average estimate, and up from a revised 1.314 million for May.
Month-on-month, starts were up 3.0% after a revised 4.6% decline in May, above the estimated 1.8%,.
Building permits came in at 1.446 million, up 3.4%, well ahead of forecast.
9.59am: Tech giants lead Nasdaq decline
Wall Street has started mostly in the red, led by a tech sell-off.
The Nasdaq Composite is down almost 2%, with the S&P 500 down 1%, but the Dow Jones turned higher after an early dip.
Also the Russell 2000's five-day 1%-plus rally seemed to end, but it also climbed out of the red, up 0.1%.
8am: US sell-off expected
A broad sell-off is expected on Wall Street on Wednesday, led by declines for tech stocks as investors fret about potential new China sanctions.
Futures for the tech-heavy Nasdaq down 1.6%, with S&P 500 futures down 1.05%.
NVIDIA Corp (NASDAQ:NVDA) share are down 4.1% premarket, adding to a 1.6% decline yesterday, with fellow chipmakers Advanced Micro Devices Inc (NASDAQ:AMD) and Super Micro Computer Inc (NASDAQ:SMCI) also down either side of 4%.
Apple Inc (NASDAQ:AAPL) and Tesla Inc (NASDAQ:TSLA) are both down more than 2% premarket, while Microsoft Corporation and Meta Platforms Inc (NASDAQ:META) are down 1% for the second day.
Futures for the blue-chip Dow Jones are down 0.3%, while the Russell 2000 is seen falling 0.8% after a five-day run of 1%-plus gains.
Reports suggest the Biden administration is frustrated with companies that continue to skirt existing sanctions, with a Bloomberg report suggesting the White House is considering imposing the ‘foreign direct product rule’.
Market analyst David Morrison at Trade Nation called it a "sharp sell-off in tech stocks", focused on semiconductors.
He noted that since last Thursday investors have rotated out of the tech leaders and hoovered up many of the smaller, more domestically-focused companies in the Russell 2000, which has lagged the other majors over the last few years, but now jumped 12% in under a fortnight.
"So what now? This rotation could proceed in an orderly fashion, and help to get valuations more balanced. But should the tech sector continue to sell off, this could lead to forced close-outs by margined players, triggering a more serious decline," Morrison says.