Chip Shares Tumble, Dragging Wall Street to Its Worst Drop in Weeks

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Shares of some of the world’s biggest chipmakers tumbled on Wednesday, pulling the stock market down to its worst day in months, as investors reacted to U.S. trade tensions with China and comments made by former President Donald J. Trump about Taiwan. The S&P 500 fell 1.39 percent, its biggest drop since late April, just one day after the index reached a record. The technology-heavy Nasdaq dropped 2.77 percent, its worst day since late 2022. The decline was led by global chip stocks, with shares of some of the biggest players in the chip industry — including ASML, Nvidia and TSMC — plunging in response to geopolitics and the former president’s remarks. Shares of these companies have surged this year amid a rise in demand for advanced artificial intelligence chips. “Stocks that have outperformed so well and for so long can often be more susceptible to bouts of fundamental bad news,” said Steve Sosnick, the chief strategist at Interactive Brokers. “Excellent, sustained performance, such as we saw in the semiconductor sector, may have led the trade to become ‘crowded,’ and therefore more fragile.”