Wall Street Slumps as Nvidia, Tesla Drop Amid Tariff Fears

U.S. stocks closed sharply lower Wednesday, led by steep losses in tech and auto stocks as investors grew wary ahead of a potential announcement on U.S. auto tariffs. President Donald Trump is expected to unveil reciprocal tariffs targeting the car industry, raising concerns about inflation and global trade tensions.

Nvidia (NASDAQ:NVDA) tumbled nearly 6%, while Tesla (NASDAQ:TSLA) slid 5.6%. General Motors (NYSE:GM) dropped 3.1% as the market braced for potential supply chain disruptions and rising production costs. "Markets hate the tariff uncertainty, especially when it pertains to autos," noted Jamie Cox of Harris Financial Group.

Chip stocks also took a hit, with Broadcom (NASDAQ:AVGO) down 5%, dragging the PHLX chip index 3.3% lower. The tech-heavy Nasdaq fell 2.04% to 17,899.02, the S&P 500 slipped 1.12% to 5,712.20, and the Dow Jones dipped 0.31% to 42,454.79.

Six of the 11 S&P 500 sectors declined, led by a 2.46% drop in information technology and 2.04% in communication services. Despite some companies rallying—like Dollar Tree (NASDAQ:DLTR), up 3.1% on news of a $1 billion Family Dollar sale, and GameStop (NYSE:GME), which surged 12% after announcing bitcoin as a treasury asset—market sentiment remained cautious.

Barclays cut its S&P 500 year-end forecast to 5,900 from 6,600 amid slowing momentum. The index is down 3% year-to-date, while the Nasdaq has lost over 7%.

Investors now await Friday’s personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure. Minneapolis Fed President Neel Kashkari warned tariffs could fuel price hikes, possibly justifying rate increases. Trading volume was light, with 15.5 billion shares exchanged, below the 20-session average.