US stocks experienced a decline as a result of the new trade restriction imposed by Donald Trump on chip designer Nvidia, causing concern among investors. Federal Reserve Chair Jerome Powell warned about the potential inflationary impact of the tariffs and the uncertainty they bring to the economy. This led to a 2% drop in the S&P 500 index, a 3% decrease in the Nasdaq index, and a 1.4% fall in the Dow Jones.

Nvidia, a key player in artificial intelligence technology, suffered a significant loss in market value following the announcement of restrictions on the sale of its H20 chip in China, resulting in an expected $5.5 billion hit in its financial quarter. Other semiconductor companies like Advanced Micro Devices (AMD) were also affected, with shares dropping due to anticipated financial impacts.

The chip industry, previously exempt from tariffs, is now facing increased uncertainty as the US government tightens regulations on Chinese access to advanced chips. Global semiconductor companies in Asia and Europe experienced stock declines in response to these developments.

Despite these challenges, there were some positive market indicators, including higher-than-expected US retail sales in March. Oil prices rose amid hopes for trade talks between China and the US, as well as reports of planned oil production cuts in Iraq. Meanwhile, California has initiated a legal challenge against Trump’s tariffs, and Trump himself announced plans for trade negotiations with Japanese officials.