Nasdaq futures fall as China curbs risks, rattles tech stocks

U.S. stocks were poised for a sharp pullback from record highs reached on Wednesday, with technology stocks under dual pressure from concerns over U.S. export restrictions on China and Donald Trump’s stance on Taiwan.

Futures on the tech-heavy Nasdaq 100 (NQ=F) were the biggest losers, down 1.2%, while futures on the S&P 500 (ES=F) fell 0.7%. Futures on the Dow Jones Industrial Average (YM=F) slipped about 0.2% after the flagship index surged 700 points on Tuesday to hit an all-time high.

Stocks are retreating as concerns about risks to technology stocks overshadow the high hopes for interest rate cuts that have fueled the rally in recent days. Those worries weighed on heavyweights whose AI-fueled gains have helped propel the S&P 500 to new records this year, with chipmaker Nvidia (NVDA) falling more than 3% in premarket trading.

The Biden administration has told allies it is considering imposing tougher restrictions on companies that continue to supply advanced chip technology to China despite existing export restrictions, Bloomberg reported. Shares of ASML (ASML, ASML.AS), which has been cited as a potential target, fell about 7% after the Dutch chipmaker reported strong quarterly results.

Meanwhile, presidential candidate Trump questioned U.S. support for Taiwan’s defense in a Bloomberg interview, suggesting the Chinese-claimed island should pay for U.S. protection. Shares of chipmaker TSMC (TSM, 2330.TW) fell more than 3% in premarket trading in New York, after wiping nearly $30 billion off Taiwan’s stock market value as stocks there tumbled.

Fresh corporate earnings could reverse the trend, as several sectors reported better-than-expected quarterly profits earlier this season. Johnson & Johnson (JNJ), United Airlines (UAL) and Discover (DFS) are on the docket Wednesday.

Also on the agenda are data on housing starts and industrial production, as well as the release of the Federal Reserve’s Beige Book, which could provide investors with some insight into the likelihood of a second rate cut in 2024.