Nasdaq Has Worst Day in 2 Years Due to Crashing Chip Stocks

The drastic decline in Nasdaq’s performance can be attributed to chip stocks crashing and the potential crack in U.S.-China trade relations. 

The Nasdaq Composite (COMP) index had its worst day on July 17th, falling by 512 points to close at 17,996.92 points. With a loss of 2.77%, it was the tech-heavy index's worst day in two years in terms of value loss within a single trading day.

The drastic decline in Nasdaq’s performance can be attributed to chip stocks crashing over the anxiety of possible curtailment in the U.S.’s semiconductor trade with China. According to a recent news report, the U.S. government, led by President Joe Biden, is considering using the most severe trade restrictions regarding China if the dragon continues to gain an advantage because of access to American-made semiconductor technology.

The Biden administration might even consider the Foreign Direct Product Rule (FDPR) to restrict China’s access to advanced semiconductor chips manufactured in the U.S., the report said. Donald Trump, the Presidential contender from the Republican Party for the next election, accused Taiwan of stealing America’s semiconductor business. The country is the key spot in the global chip supply chain.

Chip Stocks Crash, Magnificent Seven Lose $1.18 Trillion Within 5 Days

Chip and tech stocks have had an extraordinary time so far as the market bet on the artificial technology (AI) boom. However, a few adverse news reports and these stocks have come crashing down on the Nasdaq charts.

• Nvidia (NVDA)

Leading American chipmaker Nvidia (NVDA), heavily dependent on the Chinese market, fell 6.6% and closed at $117.97. Nvidia, which focuses on AI computing and chip businesses, is the world’s second-largest company in terms of market cap.

• Meta Platforms (META)

Meta Platforms (META), popular for its social media platforms such as Facebook, Instagram and WhatsApp, fell 5.68% and closed at $461.99. Despite strict restrictions by the country’s government on these platforms, China accounted for 10% of Meta’s revenue in 2023. Meta is the world’s seventh-largest company.

• Amazon (AMZN)

Another leading brand Amazon (AMZN) fell 2.64% and closed at $187.93. Popular for e-commerce, cloud computing, digital streaming, and AI, Amazon is the world’s fifth-largest company.

• Apple (AAPL)

Another leading tech company, Apple (AAPL), which counts China as its third-largest market in terms of revenue, also dropped 2.5% and closed at $228.88. Apple, well-known for iPhone mobiles, MacBook computers, and macOS operating systems, is the world’s largest company.

Image: Composite index (COMP), by Nasdaq

• Alphabet (GOOGL)

Another leading American tech giant, Alphabet (GOOGL), fell 1.55% to close at $182.62. Alphabet, most popular for its Google brand, focuses on the Internet, automation, cloud computing, software, and AI. It is the world’s fourth-largest company.

• Microsoft (MSFT)

Leading software provider Microsoft (MSFT) fell 1.33% to close at $443.52. The company is well-known for its Windows operating system (OS) and occupies nearly 80% of the desktop OS market in mainland China. Microsoft is the world’s second-largest company, and it even topped the chart for a few months by beating Apple.

• Tesla (TSLA)

Elon Musk-led American tech company Tesla (TSLA) fell 3.14% to close at $248.50. The company is well-known for its clean energy, automobile, robotics and AI ventures. China is Tesla’s biggest electronic vehicle (EV) market after the U.S. Tesla is the world’s eleventh-largest company.

The Magnificent Seven stocks—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla—have lost a total market cap of $1.1 trillion over the last five trading days.