April 17, Wednesday, the US stock market closed sharply lower. The Dow Jones Industrial Average fell nearly 700 points, a decline of 1.73%, the S&P 500 Index closed down 2.24%, and the Nasdaq Composite Index closed down 3.07%.

Influenced by import and export control-related factors, NVIDIA continued its downward trend at the opening, with its stock price falling 6.9% on the day, marking its largest single-day drop since January. Other chip stocks also followed suit in decline, with the VanEck Semiconductor ETF falling more than 4%. AMD dropped 7.4%, and Micron Technology slipped 2.4%.

NVIDIA stock performance iFinD

The poor performance of ASML's financial report further exacerbated the chip sector's downturn, with its stock plunging 7%.

Among technology giants, Tesla fell 4.94%, Apple fell 3.89%, and other major tech stocks also declined.

Fed Clearly Not in a Rush to Cut Rates

This time, the three major indices fell mainly due to investors' panic triggered by Chairman Powell's concerns about the economic impact of tariffs and other factors.

When the US stock market fell before, Trump repeatedly expressed his hope that the Fed would cut interest rates, and the market also hoped for an emergency rate cut by the Fed to stabilize the stock market. However, in his latest speech, Chairman Powell stated that he was not in a hurry to cut rates.

Powell once again emphasized that the Federal Reserve will focus on preventing tariff-driven price increases from evolving into more persistent inflationary pressures. This statement reinforced the signal Powell has repeatedly emphasized: the Fed is not in a rush to adjust its benchmark policy interest rate.

Cut in speaking video screenshot

Powell issued a strong warning about the inflationary effects of Trump's trade policies that day. He said that Trump's tariffs "are very likely" to temporarily boost inflation and warned that these effects may last for a long time.

Powell also noted that many policies in areas such as trade, immigration, fiscal affairs, and regulation are still evolving, but rising inflation and slowing economic growth may be on the horizon.

Before Powell spoke, the US stock market had already fallen, and after his speech, the losses widened further.

Some analysts said, "People originally thought Powell would remain neutral, but he showed a hawkish tendency."

Powell said that the United States faces highly uncertain prospects, with high risks of rising unemployment and inflation.

Regarding Trump's previous claim that he would replace the Fed chairman, Powell said that the Fed's independence is granted by US law.

According to records, the term of current Fed Chairman Powell will end in May 2026. On Monday, local time, US Treasury Secretary Beasant said in an interview that he and the president are "always considering" candidates for the next Fed chairman and plan to start interviewing potential candidates in the fall.

AI Chip Sales Ban Impact Continues to Escalate

On April 15, Eastern Time, NVIDIA announced that due to US government restrictions on the export of H20 AI chips to certain countries, the company will accrue $5.5 billion in related costs, which continues to expand, causing volatility in the semiconductor sector.

The H20 chips launched in some markets were specifically designed to comply with US export controls, generating revenue of approximately $12 to $15 billion for the company in 2024.

In addition to existing export controls, NVIDIA will also face new restrictions brought by the "AI Diffusion Rule," which will take effect next month. Initially proposed by the Biden administration, this rule aims to regulate the scope of the company's chip exports.

Rising US Inflation Expectations

In the midst of the tariff storm, American households are facing the dilemma of potential price spikes and supply shortages.

A recent study released by Yale University's Budget Lab shows that the tariff measures implemented by the US government this year have temporarily pushed up the price level by 2.3%. Prices of basic drugs may rise by 12%, and food prices may increase by 2.6%. The impact on clothing and textile prices is particularly noticeable, with clothing prices potentially soaring by over 60% in the short term.

American consumers shopping in the supermarket

Average American households will face approximately $4,700 in cost increases.

In addition to the inflation warning mentioned earlier by Powell, former US Treasury Secretary Summers also pointed out that Trump's tariff policies have had the greatest impact on middle-class families since the 1970s, and Trump's tariff plans were "not well considered."

The April global fund manager survey by Bank of America shows that investors expect inflation to rise over the next 12 months.

The monthly consumer expectations survey released by the New York Fed shows that respondents expect one-year inflation to reach 3.6%, an increase of 0.5 percentage points from February, reaching the highest level since October 2023.

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7494084577342915108/

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