Investors are once again wrapped up in uncertainty due to escalating trade tensions and concerns about the global economy. Nvidia’s shares gave the tech sector and the broader market a good jolt. Wall Street stepped back on Wednesday under the weight of Nvidia’s steep decline and heightened uncertainty in global economic activity. The company claimed that new restrictions on export to China would chisel away billions of dollars from its results, while companies all over the world are worried that President Donald Trump’s trade war has made it hard to figure out how they or the economy will do this year. The S&P 500 had lost 1.2% midday, Dow Jones Industrial Average was down by 0.6%, with the Nasdaq Composite leading decline at 2.2%.

Nvidia Dips to 7.8% & Industry Follows

Nvidia’s shares sank 7.8% when it was revealed that new U.S restrictions on its H20 chips, designed for China, could potentially be used to create supercomputers. This indicates a loss of at least $5.5 billion from the firm’s Q1 results.

The wave probably made its presence felt across the entire semiconductor industry. AMD went down 7%, while Dutch chip machinery ASML lost 5.2% even after announcing a good demand for AI products. There was cautious revenue guidance from the company, and what added fuel to the fire was when the CEO spoke of increased macro uncertainty. CEO Christophe Fouquet said,

“However, the recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while.”

Global Forecasts is Under Pressure

Trade war between the U.S and China just keeps shredding the corporate clarity. United Airlines, in a rare departure from past practice, went ahead and gave two projections on its financial outlooks. One with a recession and another without it. It said,

“It is now impossible to predict this year with any degree of confidence”.

Even with all the economic haze, United stock saw an increase of 1.2% after surpassing Q1 profit forecasts and reported outstanding bookings on premium and international flights. J.B Hunt Transport, which has a high dependence on freight volumes, saw a share crash of 6.9% even after exceeding the estimates. This is a very clear indication of market sentiment driven by macro fears instead of fundamentals.

Retail Gains & Recession

Sales at U.S retailers accelerated more than economists had expected, as March retail sales soared 1.4%. It likely resulted from the rush to buy more cars, electronics and other items by American consumers before the approaching price hike was caused by tariffs. Economists publicized it as a short-term boost, warning that persistent uncertainty and price hikes could reverse consumer purchasing trends and push the U.S closer to the recession.

Expectations are that tariffs will increase consumer prices and squeeze corporate margins. According to Bank of America global fund manager survey, recession expectations are currently at their fourth highest level in two decades. According to the World Trade Organization (WTO), tariffs may lead to a decline of 0.2% in the volume of world merchandise trade for 2025. The WTO is worried as well, with expectations that global merchandise trade could contract by 1.5% this year if tariff tensions grow. Director-General Ngozi Okonjo-Iweala 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.”

Global Market Reacts Negatively

The market drop was not only confined to the U.S rather global markets remained broadly lower and indexes fell across much of Europe and Asia. In Hong Kong, the stocks dropped to 1.9%, in Tokyo it fell to 1.0%, in Seoul the drop was 1.2%, and in Paris it dropped to 0.1%.

The FTSE 100 of London was an exception, it went up less than 0.1% after a drop in UK  inflation for two consecutive months due to falling gas prices. In the bond market, yields fell as investors moved into safe havens. The 10-year Treasury yield fell from 4.35% to 4.32%. The sudden rise last week stirred the market along with Trump, indicating that investors might no longer view U.S government bonds as havens for their money, thanks to the trade war.

The market sends a very clear message that uncertainty is the new normal and investors are forced to trade not on fundamentals, but through the vague lens of foreign policy. With tariffs looming like dark clouds over consumers, the runway ahead looks anything but smooth. While certain pockets hold strong, such as airline bookings and the health sector, other sectors are holding their breath on Wall Street, not for the next move, but for clarity.