The Trump administration announced on Monday a possible expansion of sanctions on countries doing business with Iran as part of what it billed as an “economic D-Day,” but stopped short of actually imposing penalties.
Nvidia dropped 2.9 percent, Micron Technology fell 5.8 percent and Broadcom slid 2.6 percent, pressuring the S&P 500 Information Technology index.
Sentiment for technology firms was also hit by growing political opposition to AI data centres.
Texas Governor Greg Abbott delivered one of the starkest warnings yet from a Republican to the AI industry, saying data centre companies “dug their own grave” and deserve the backlash they’re facing after failing to win community support, Axios reported on Sunday.
This month, Abbott ordered a pause on approvals of new data centre projects through the state’s grid interconnection process, citing concerns that a surge in electricity demand could threaten reliability at a time when opposition to the projects is growing.
“The bigger worry we have is the hawkish rhetoric we’re starting to hear from politicians on AI and data centres,” said Ohsung Kwon, chief equity strategist at Wells Fargo. “We’ve been highlighting that as a big risk heading into the midterms.”
Financials, however, gained, with JPMorgan Chase up 1.4 percent and Visa up 3 percent. They also kept the blue-chip Dow afloat.
The Dow Jones Industrial Average rose 140 points, or 0.3 percent, to 53,417, the S&P 500 lost 21 points, or 0.3 percent, to 7,652, and the Nasdaq Composite lost 200 points, or 0.8 percent, to 25,980.
Concerns over ballooning government debt had pushed the 30-year yield to a 19-year high before the US Treasury announced support measures last week.
CNBC reported on Monday that US Treasury Secretary Scott Bessent could tap the department’s near US$1 trillion General Account to help fund bond buybacks. Yet, the 30-year US Treasury yield remained above the 5 percent threshold.
This turbulence has sharpened focus on Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium on Friday, where investors will look for clues on policymakers’ reading of the Treasury’s rescue efforts.
Quarterly results from AI giant Nvidia are expected to be another key catalyst for markets. Any sign of slowing growth could reignite concerns over stretched valuations.
“Nvidia needs to impress in order to keep one leg of the stock market stable, and Warsh needs to provide clarity on interest rates in order to keep the other leg stable,” said Richard Reyle, chief investment officer at Questar Capital Partners.
Separately, US President Donald Trump warned that tariffs on cars, trucks and automotive parts from Canada would be increased to 50 percent starting January 1 after trade talks collapsed over the weekend.
Automakers Ford and General Motors fell 3.3 percent and 1.1 percent respectively, while trucking company JB Hunt Transport dropped about 5.7 percent. (Reuters)
