Technology stocks are hypersensitive to trade issues since big chipmakers and other companies rely on China for raw materials and manufacturing. China’s large consumer base is also important for their sales growth. Chipmaker Nvidia slumped 2.6% and Broadcom fell 3.5%
While U.S. President Donald Trump’s trade war with the second biggest economy and leading global rival is shaking up the global trading system, the U.S. economy has so far dodged any major impact from his frequently shifting U.S. tariff policies. That could change if nations fall back into a cycle of retaliatory tariffs and companies pass along more of the higher costs to consumers.
The government shutdown has disrupted the usual economic updates on inflation, consumer spending and employment, making it more difficult for investors and economists to gauge the tariffs’ economic impact.
A lack of updates about the U.S. economy has also left the Fed without much of the data it uses to make policy decisions. The central bank cut its benchmark interest rate by a quarter of a percentage point in September amid worries that unemployment could worsen. That marked its first cut of the year and Wall Street expects similar cuts at the Fed’s meetings in October and December.
Wall Street is looking toward the upcoming round of company earnings and forecasts to get a better sense of the broader economic picture.
Fresh profit reports can also help traders gauge the broader market’s value amid criticism that it has become too expensive. For stocks to look less expensive overall, either prices need to fall or companies’ profits need to rise.
Reports from banks, the first big sector to kick off this round of earnings updates, hint at Wall Street notching one of its most profitable quarters ever. Still, executives from major banks expressed various degrees of caution about markets and the economy.
In other dealings early Wednesday, U.S. benchmark crude oil lost 10 cents to $58.60 per barrel. Brent crude, the international standard, fell 17 cents to $62.22 per barrel.
The U.S. dollar slipped to 151.11 Japanese yen from 151.83 yen. The euro rose to $1.1624 from $1.1608.
