NEW YORK — Wall Street’s record-setting rally ran into a wall Wednesday as worries about worsening trade tensions with China slammed some of the market’s biggest winners of the year.
The S&P 500 was 0.9% lower, a day after setting an all-time high for the 38th time this year. The Dow Jones Industrial Average was adding 72 points, or 0.2%, to its own record, while the Nasdaq composite was down 1.7%, as of 9:35 a.m. Eastern time.
Chip companies around the world tumbled to some of the sharpest losses after a report from Bloomberg News said President Joe Biden is considering the most severe trade restrictions available if companies like the Netherlands’ ASML and Japan’s Tokyo Electron continue to ship advanced semiconductor technology to China. The U.S. government has blocked Chinese access to advanced chips and the equipment to make them, citing security concerns, and urged its allies to follow suit.
ASML saw its stock trading in the United States drop 9% even though it reported sales for the spring that came in at the high end of its forecasted range. Shares of Tokyo Electron, meanwhile, dropped 7.5% in Tokyo to cull its gain for the year to 32.2%.
Another major chip company, Taiwan Semiconductor Manufacturing Co., sank after former President Donald Trump criticized the self-governed island claimed by Beijing, which the U.S. is obligated by treaty to defense if it is attacked.
“Taiwan should pay us for defense,” Trump said according to a transcript of an interview published by Bloomberg. “Taiwan took our chip business from us, I mean, how stupid are we?” he said.
TSMC’s stock trading in the United States dropped 5.6%.
Reverberations reached chip stocks around the world, including big U.S. players that have been some of Wall Street’s biggest stars this year amid a frenzy around artificial-intelligence technology. Nvidia fell 4.4% after soaring 155.2% this year through the day before.
Advanced Micro Devices fell 5.8%, and Broadcom dropped 4.5%.
Losses were milder on Wall Street outside of technology, but there was still weakness.
Five Below, a retailer targeting teens and tweens with products priced at $5 or below, tumbled 15.3% after its CEO, Joel Anderson, stepped down from his job and from the board “to pursue other interests.” It named company co-founder Thomas Vellios as executive chairman on an interim basis. It also gave a profit forecast for the second quarter that fell short of analysts’ expectations.
Spirit Airlines lost 7.1% after the discount carrier cut its forecast for revenue in the second quarter. It said it’s making fewer dollars from fees outside of tickets than expected.
J.B. Hunt Transport Services fell 4.7% after it reported weaker profit and revenue for the latest quarter than analysts expected. The freight company was hurt by higher insurance and claims costs, among other things.
On the winning side of Wall Street, Johnson & Johnson rose 1.7% after topping analysts’ forecasts for profit in the latest quarter. It was one of the largest reasons the Dow Jones Industrial Average was able to rise despite the tumbles for chip stocks.
U.S. Bancorp also rallied 3.6% after likewise topping analysts’ forecasts for profit and revenue.
In the bond market, the 10-year Treasury yield was holding steady at 4.16%, where it was late Tuesday.
In stock markets abroad, London’s FTSE 100 was 0.1% higher after data showed the inflation rate remained steady at the Bank of England’s 2% target in June.
Indexes were mixed elsewhere across Europe and Asia. Hong Kong’s Hang Seng gained 0.1%, while stocks sank 0.5% in Shanghai as traders await the outcome of a top level policy-setting meeting of the ruling Communist Party, which wraps up on Thursday. The closed-door gathering in Beijing is expected to endorse leader Xi Jinping’s vision for investing heavily in strengthening China’s self-sufficiency in advanced technologies.
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AP Business Writer Elaine Kurtenbach contributed.
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