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U.S. STOCKS CRUMBLE WITH WEAK CHIPS, POWELL QUIPS

The three major U.S. stock indexes closed sharply lower on Wednesday as weak chip stocks cast a pall from the get-go and then Fed Chair Jerome Powell said that while the U.S. economy is still in a solid position, growth appears to be slowing.

AI chip darling Nvidia NVDA.O slumped after the company flagged steep charges from new U.S. curbs on chip exports to China, fuelling worries about the fallout of an escalating trade war.

Also the Trump administration is weighing penalties that would block China's DeepSeek from buying U.S. technology and debating barring Americans' access to its services, the New York Times reported on Wednesday.

The House Select Committee, which focuses on national security threats from China, opened an investigation into Nvidia's sale of chips across Asia, the report said.

Additionally, ASML ASML.AS, the world's biggest supplier of computer chip-making equipment, declined after the company reported a Q1 bookings miss and said tariffs clouded its outlook.

A late rally pared stock market losses some, but the Philadelphia semiconductor index .SOX still tumbled 4.1% on the day.

Powell, in remarks for the Economic Club of Chicago, also said that so far larger-than-expected tariffs likely mean higher inflation and slower growth. He said the Fed is waiting for greater clarity before considering policy changes.

Regarding these events, Art Hogan, market strategist at B. Riley Wealth Management in Boston, said:

“We didn’t get off to a good start today, with the news of Nvidia’s writedown, and then Powell sounded more hawkish than he did in his last press conference, leaning into the argument that what is happening is going to push inflation higher."

Hogan added "That’s all he needed to say and then it was ‘Katie, Bar the Door.’ I don’t think any traders stuck around to listen to anything else after that.”

Nevertheless, based on interest rate probabilities, the market is now expecting 91.1 basis points of Fed rate cuts through year-end.

Here is a snapshot of where markets stood just shortly after 4 p.m. EDT:

(Terence Gabriel, Suzanne McGee)

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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:

US IPO MARKET UNDER A TARIFF CLOUD - CLICK HERE

DESPITE THE TORTOISE OUTRUNNING THE HARE, BOFA CLIENTS NOT ON BOARD - CLICK HERE

INVESTORS' GUIDE ON HOW TO PROCEED IF CHINESE SHARES VANISH FROM AMERICA'S STOCK MARKETS - CLICK HERE

THAT ASIDE, MRS. LINCOLN, HOW WAS THE PLAY? WEDNESDAY ECONOMICS - CLICK HERE

U.S. STOCKS FALL IN EARLY TRADE AS TECH WEIGHS - CLICK HERE

NASDAQ COMPOSITE POISED TO BE CHIPPED AT THE OPEN - CLICK HERE

LOOKING TO WEATHER A RECESSION? CONSIDER TOWERS - CLICK HERE

WATCHING THE NEGOTIATIONS - CLICK HERE

WHAT ARE EUROPEAN STOCKS PRICING IN? - CLICK HERE

TECH SECTOR PULLS STOXX 600 LOWER - CLICK HERE

EUROPE BEFORE THE BELL: FUTURES FALL AS TRADE TENSIONS TAKE ANOTHER TURN - CLICK HERE

MARKETS WOBBLE OVER US-CHINA WRANGLING - CLICK HERE