Nasdaq drops 3.1%, chipmakers hit hard, Asia rallies on trade resilience
April 16, 2025 – U.S. equities extended their decline Wednesday after Federal Reserve Chair Jerome Powell warned that President Trump’s sweeping tariffs could lead to “higher inflation and slower growth.” His comments poured cold water on expectations for imminent rate cuts and further stoked recession fears on Wall Street.
- S&P 500 fell 2.2%
- Dow Jones Industrial Average dropped 1.7%
- Nasdaq Composite slumped 3.1%, led by tech
Chip Stocks Slammed
Semiconductor names were among the hardest hit, with Nvidia and AMD both plunging 7% following news that Nvidia will be banned from exporting certain AI chips to China. The development adds another layer of geopolitical tension to an already fragile tech sector.
Adding technical weight to the selloff, the S&P 500 triggered a “death cross” on Monday, with its 50-day moving average crossing below the 100-day — often viewed as a bearish (though inconsistent) signal.
Powell Prioritizes Inflation Fight
Powell’s firm tone signaled that rate cuts may not come as soon as markets hoped, even as recession odds tick higher.
“Recession odds are climbing even further due to the pushback on the timing of cuts,”
— George Vessey, Convera
UBS’s Paul Donovan noted that Powell’s speech won’t have surprised markets, “but Powell saying it has policy implications.”
Goldman Sachs: Recession Risk at 65%
Goldman Sachs now sees a 65% chance of recession and only 0.5% U.S. growth for 2025 (Q4/Q4). Their team expects three “insurance” rate cuts from the Fed to soften the blow of weak demand and labor market softening.
“The outlook remains very fluid… We see a low bar for returning to a recession baseline.”
— Goldman Sachs note to clients
Global Market Divergence
Despite the U.S. rout, Asian equities rallied this morning as investors weighed whether Trump may have overplayed his hand in the trade war. Indexes in Japan, South Korea, and mainland China saw modest gains as regional traders bet on resilience and policy support from local governments.
In Europe, early trading was softer, mirroring Wall Street’s overnight tone. However, U.S. futures were modestly higher heading into the Thursday open, suggesting some bargain-hunting could emerge.
The Big Picture
The Fed is walking a tightrope between combating inflation and avoiding a recession — and markets are wobbling. With global divergence on display and trade tensions showing no signs of easing, the path forward for equities will likely remain volatile.
Coming up:
- U.S. retail sales and jobless claims data
- Big Bank earnings later this week
- Powell’s next public appearance
