MARKET SNAPSHOT

U.S. stocks declined as tech stocks led a broader market slide and Federal Reserve Chair Jerome Powell said tariffs are "highly likely" to lead to a temporary rise in inflation. Treasury yields declined as Powell said tariffs could raise prices and unemployment at the same time, making decisions on interest rates harder to make. Oil traded higher, buoyed by signals that China could be open to negotiations over tariffs. The dollar fell and gold futures rose to a record high amid geopolitical and macroeconomic tensions.

MARKET WRAPS

EQUITIES

Stocks declined as traders reacted to a disclosure from Nvidia that it would take a $5.5 billion hit because future sales of its H20 AI accelerators to China would require a license from the U.S. Department of Commerce.

The Nasdaq Composite dropped 3.1% and the Dow Jones Industrial Average fell 1.7%. The S&P 500 fell 2.2%.

News that the Commerce Department will require a license to sell H20 chips to China is the latest sign that large tech companies, despite apparent efforts to appease the Trump administration, are still struggling to sway President Trump.

Nvidia said earlier this week it plans to build artificial intelligence supercomputers in the U.S. and spend up to $500 billion on AI infrastructure in the U.S.

Also, Powell said, "The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth."

Referring to the central bank's dual mandate of price stability and maximum employment, Powell warned, "we may find ourselves in the challenging scenario in which our dual-mandate goals are in tension."

Earlier Wednesday, Chinese shares ended mixed as semiconductor companies led the gains among the major stocks.

The benchmark Shanghai Composite Index gained 0.3%, the Shenzhen Composite Index fell 1.1% and the ChiNext Price Index declined 1.2%. Hong Kong's Hang Seng Index declined 1.9%.

Japanese stocks ended lower as concerns about U.S. tariffs and their economic implications persisted. Chip and electronics stocks led the losses. The Nikkei Stock Average fell 1%

Australia's S&P/ASX 200 held steady.

New Zealand's NZX-50 rose 0.5%.

COMMODITIES

Oil futures increased, supported by a weaker dollar and a Bloomberg report that Beijing would be open to negotiate under certain conditions regarding trade tensions.

According to the report, citing a person familiar with the Chinese government, Beijing would be open to talks if the Trump administration showed more respect and adopted a more consistent position.

"A return to some kind of 'normal' trade relationship between the two largest economies in the world would be a positive price development that could postpone some of the more dire forecasts for oil prices," Mizuho's Robert Yawger said in a note.

However, further gains seem to be capped by persistent concerns over the impact of U.S. tariffs on global economic growth and energy demand, with market participants in wait-and-see mode.

West Texas Intermediate settled up 1.9% at $62.47 a barrel. Brent crude gained 1.8% to $65.85 per barrel.

April gold gained 3.4% to $3,326.60 per troy ounce.

It was the largest one-day percentage gain since April 9, 2020. Gold was up in six of the past seven sessions.

Gold's latest rally to another record comes as the U.S. looks to further isolate China from global trade, SP Angel analysts said in a note. Treasury Secretary Scott Bessent has pitched the idea of extracting concessions from U.S. trading partners to isolate China, and reports of removing Chinese stocks from U.S. exchanges have not been ruled out. China is holding off negotiations with the U.S. despite Trump suggesting a deal is possible.

The U.S. dollar has resumed its downward trend and ETF demand is picking up, further strengthening gold's appeal, SP Angel added.

TODAY'S TOP HEADLINES

Powell Warns of 'Challenging Scenario' for Fed as Trade War Rages

Federal Reserve Chair Jerome Powell warned that the central bank could face difficult trade-offs in trying to cushion the U.S. economy from the fallout of President Trump's trade war.

Large tariff increases that push up consumer prices while weakening economic activity would put the central bank in the uncomfortable position of choosing whether to focus on its goal of promoting low inflation or its mandate to foster a healthy labor market, Powell said in remarks prepared for delivery in Chicago on Wednesday.

"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension," Powell said.

WTO Sees Fall in Trade Flows, Warns Against Spreading Conflict

Global trade in goods will fall this year, and the decline could be severe if President Trump presses ahead with suspended tariff hikes and uncertainty about trade policy spreads beyond the U.S., the World Trade Organization said Wednesday.

The Geneva-based dispute resolution body expects exports and imports of goods to fall by 0.2% this year as a result of the tariff rises implemented by April 14, both in the U.S. and in retaliating countries. It had previously forecast growth of 2.7%. The WTO's economists see a continued if less severe hit in 2026, lowering their growth projection to 2.5% from 2.9%.

In its twice-yearly report on the trade outlook, the WTO said cross-border sales of goods could fall by 0.8% if tariff rises on countries around the world that were announced by the U.S. on April 2 but then suspended for 90 days are implemented. Additionally, should businesses become as uncertain about the trade policies of other major economies as they are about those of the U.S., the decline could deepen to 1.5%.

March Retail Sales Beat. Consumers Are Stocking Up Ahead of Tariffs.

Spending to get ahead of tariffs made March a sunnier month for retail sales, which came in higher than projected. But uncertainty about the import taxes continues to cloud the outlook.

Retail sales gained 1.4% in March from February, better than economists' forecasts for a 1.3% increase, the Census Bureau said Wednesday.

March sales rose 4.6% from a year ago.

Cleveland Fed's Hammack Says the Market Selloff Is Different This Time

Cleveland Federal Reserve President Beth Hammack said Wednesday that policymakers must consider the possibility that economic, and even market, conditions may not follow normal patterns going forward. Echoing Dorothy Gale's infamous line from The Wizard of Oz, Hammack said "we may not be in Kansas anymore."

In prepared remarks to the Columbus Metropolitan Club Weekly Forum on Wednesday, Hammack said President Donald Trump's tariff hikes constitute a "substantive change" in trade policy and it will take time to work through the uncertainty caused by these changes.

"Financial markets have been volatile as they incorporated this news into various asset prices," Hammack said of recent market reactions. Before joining the Cleveland Fed in August, Hammack was at Goldman Sachs and has worked in the financial markets for 30 years.

Nvidia Is Now the Biggest U.S.-China Bargaining Chip

Nvidia's position in artificial-intelligence computing is strong enough that even the company's bottom-shelf chips have plenty of demand. In the trade war, this isn't proving to be a good thing.

The company's share price fell hard Wednesday after Nvidia told investors the U.S. government now requires a license for it to sell its H20 AI chips in China and a handful of other countries. The company said this will lead it to take a current-quarter $5.5 billion charge related to inventory and purchase commitments for the chip.

The inventory charge indicates about $13 billion in actual H20 sales, according to Tim Arcuri of UBS. Nvidia generated $115.2 billion in data-center revenue in its fiscal year that ended in January-and is projected to do about $182 billion in sales for that segment this year, according to FactSet estimates.

Expected Major Events for Thursday

00:30/SIN: Mar Merchandise Trade, incl non-oil domestic exports (NODX)

01:00/SKA: Bank of Korea Monetary Policy Committee meeting and decision

01:30/AUS: Mar Labour Force

01:30/AUS: Mar Foreign Exchange Transactions and Holdings of Official Reserve Assets

08:59/SKA: Mar Revised trade data

09:59/CHN: Mar FDI Foreign Direct Investment

23:30/JPN: Mar CPI (Nation), CPI ex-food (Nation)

All times in GMT. Powered by Onclusive and Dow Jones.

Write to us at singaporeeditors@dowjones.com

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

April 16, 2025 16:48 ET (20:48 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.