Nasdaq Tumbles 3.1% as Nvidia Drives Tech Sell-Off; Markets Assess Fed Chair Remarks

The Nasdaq Composite Index plummeted 3.1% this week, marking its worst single-day decline in over a year, as investors grappled with twin blows from Nvidia’s stock collapse and Federal Reserve Chair Jerome Powell’s stark warnings about the economic risks of trade tariffs. The tech sector’s rout, led by a 5.4% plunge in Nvidia’s shares, spilled over into a broader market sell-off, with the S&P 500 dropping 1.2% and the Dow Jones Industrial Average falling 0.8%. Meanwhile, Powell’s remarks underscored the Fed’s growing unease over protectionist policies destabilizing its dual mandate of price stability and maximum employment—a tension that could define the economic outlook for years to come.

Nvidia’s Crisis: A Microcosm of Tech’s Trade Headwinds

The tech sell-off began with Nvidia, whose shares tumbled 5.4% on April 17 after the U.S. government imposed new export restrictions on its H20 AI chips to China. The move, part of a broader 10% baseline tariff on all imports and a 145% duty on Chinese goods, forced Nvidia to take a $5.5 billion charge for unsellable inventory and stranded commitments. The fallout extended to the semiconductor sector, with the VanEck Semiconductor ETF (SMH) falling 3.2% and peers like AMD and TSMC declining 2.8% and 1.9%, respectively.

The restrictions highlighted the vulnerability of tech firms reliant on global supply chains. reveal a steep drop from its April 10 peak, while the Nasdaq’s tech-heavy composition amplified the sector’s pain. Investors now fear a deepening U.S.-China trade war, with the World Trade Organization warning that reciprocal tariffs could slash global trade by 1.5% this year.

Powell’s Dilemma: Tariffs as a “Negative Supply Shock”

Fed Chair Powell’s April 16 speech framed tariffs as a central threat to the U.S. economy, warning that the “significantly larger than anticipated” trade barriers risked creating stagflation—a toxic mix of high inflation and weak growth. Powell noted that core PCE inflation remains elevated at 2.6%, just above the Fed’s 2% target, even as tariffs stoke prices and slow GDP growth. His remarks echoed Chicago Fed President Austan Goolsbee, who likened tariffs to a “negative supply shock,” leaving policymakers without a clear playbook to address the dual pressures of rising costs and flagging demand.

The Fed’s patience—Powell vowed to “wait for greater clarity” before adjusting rates—contrasts with market expectations of a potential rate cut by year-end. shows the Fed’s reluctance to pivot, despite weakening consumer spending and business confidence. The 10-year Treasury yield held steady at 4.34%, reflecting skepticism about the Fed’s ability to navigate stagflation without triggering a recession.

Market Mayhem: Sector Shifts and Safe-Haven Frenzy

The broader market reaction revealed stark sector divides. While tech stocks tanked, energy and airlines surged—United Airlines climbed 5% on strong earnings—benefiting from higher oil prices and a weaker dollar. Gold, meanwhile, hit a record $2,300 per ounce as investors sought refuge from currency instability.

The sell-off also reflected growing anxiety over the Trump administration’s trade agenda. Threats of a 25% tariff on auto imports and existing levies on aluminum, steel, and Mexican/Canadian goods have already slowed GDP growth, with first-quarter consumer spending weakening to 0.8%. underscores the tech sector’s underperformance, down 7%, compared to energy’s 12% gain.

Conclusion: A Fragile Equilibrium

The Nasdaq’s 3.1% drop and Nvidia’s collapse expose the fragility of a market increasingly tied to global trade dynamics and central bank policy uncertainty. With inflation stubbornly above target and trade tensions escalating, the Fed faces an unenviable choice: tolerate higher prices to protect jobs or risk stifling growth with tighter policy.

Data paints a grim picture:
- Nvidia’s $5.5 billion charge represents 12% of its 2024 revenue.
- The WTO forecasts global trade to grow just 1.7% in 2025, down from 3.2% in 2024.
- Consumer inflation expectations, now at 3.8%, risk embedding higher price trends.

Investors are caught in a vice between geopolitical risks and monetary policy uncertainty. Until trade conflicts ease or the Fed clarifies its path, tech stocks—and markets broadly—will remain vulnerable to volatility. As Powell warned, the Fed’s dual mandate has never been more at odds. The question now is whether markets can endure the tension, or if the cracks will deepen into a full-blown crisis.