Powell Warns on Tariff Risks as Crypto Defies Market Downturn

Stocks in the United States dropped sharply Wednesday amid growing trade tensions and fresh warnings from the Federal Reserve (Fed). Investors reacted negatively to export restrictions and economic uncertainty, leading to steep losses in major indexes. Meanwhile, Bitcoin (BTC) and the crypto market remained stable, defying market trends and drawing interest from investors seeking alternatives.

Nvidia-led Tech Plunge Hits Markets Hard

Nvidia‘s shares suffered a steep 10% decline after the firm had to account for a $5.5 billion export limit charge from U.S. sanctions on China. The Chinese market depends on H20 graphics chips, so the export restriction from America is a tribute to a significant decline in future performance expectations. Soon after, investor faith in semiconductor stocks rapidly declined.

The market-wide dumping of technology-related assets led other major semiconductor companies to experience substantial share price drops. The semiconductor sector experienced significant losses when AMD shares dropped by 8%, Micron’s share value declined by 3%, and ASML’s share value declined by over 7% due to negative earnings results. The Nasdaq Composite lost more than 3%, thus entering a potential bear market state.

The stock markets faced intense pressure, causing the S&P 500 to drop 2.24% while the Dow Jones lost 1.73% during the day. Technology stocks demonstrated the biggest declines, which caused the other major indexes to decrease in value. The market showed hesitation because rising policy risks and regulatory challenges started to impact worldwide supply chain systems.

Powell Flags Tariff Impact, Dims Rate Cut Hopes

During his remarks at the Economic Club of Chicago, Federal Reserve Chair Jerome Powell described the trade tariff-related risks. He predicted that higher tariffs would lead to increased inflation and hinder economic development over the next several months. The Federal Reserve plans to restrain itself by refraining from unnecessary interest rate adjustments.

Based on Powell’s comments during the Economic Club speech, the Fed seemed unlikely to decrease interest rates. Because of this particular event, the rate-sensitive technologies and industrial sectors experienced an enhanced level of selling activity. The yield rates within bond markets showed modest growth due to renewed inflationary fears.

The March retail figures reported a 1.4% surge, which indicated that consumer spending had increased before the trade imposition took effect. The buying rush by consumers occurred before anticipated price hikes on items that need to be imported. Analysts viewed the market performance differently as they debated its ability to keep up this pace.

Bitcoin Holds Firm as Traditional Assets Slide

Bitcoin managed to preserve its position at $84,000 even though stock market equities and commodity values fluctuated. The standards traders applied to Bitcoin prove users acknowledged its value retention ability. 

During market instability, institutional investment in digital assets maintained the stability of Bitcoin’s price. The most popular digital asset shows a 1.66% increase, which positions it at $84,760. BTC reached its highest recorded price point at $85,428, while its lowest point during the day reached $83,154. 

 

Because Bitcoin differs from tech stocks, trade tariffs or regulatory modifications entered the market largely untouched. Because of this global economic uncertainty, the stability of crypto markets became possible. Bitcoin secured its place as the number one cryptocurrency among other digital assets during this period.

Digital assets became a target for investors who wanted to spread their portfolios as stock values dropped. Bitcoin gained the interest of investors who sought inflation protection and alternative investment options. The crypto markets proved more stable as sentiment in equities weakened.

FAQs

Why did Nvidia shares fall sharply?

Nvidia disclosed a $5.5 billion charge due to new U.S. export restrictions impacting sales to China, hurting its stock.

What did Jerome Powell say about tariffs?

He warned that tariffs may increase inflation and slow economic growth, reducing the chances of a rate cut in June.

How did Bitcoin perform during the sell-off?

Bitcoin remained stable around $84,000, showing resilience and attracting investor interest during market turmoil.

Which other chipmakers saw losses?

AMD dropped 8%, Micron fell 3%, and ASML declined 7% following weak earnings and increased trade restrictions.

Will tariffs affect consumer spending?

Retail data showed strong March sales, but analysts warned future spending could slow if tariffs push prices higher.

Glossary of key terms

Tariff: A tax imposed on imported goods, often used in trade policies to protect domestic industries or exert pressure on other nations.

Inflation: A price rise over time, reducing purchasing power and affecting consumer and business decisions.

Rate Cut: A reduction in the interest rate set by a central bank, typically aimed at boosting economic activity.

Bear Market: A market condition where prices fall 20% or more from recent highs, indicating prolonged pessimism.

Cryptocurrency: A digital or virtual currency that uses cryptography for security and operates independently of central banks.

Reference: 

Investor’s Business Daily

CoinMarketCap

Morningstar

Barrons

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