US stocks fall on Wednesday, dragged down by a sharp sell-off in tech stocks, as renewed trade war concerns rattle investors

US stocks fell on Wednesday, dragged down by a sharp sell-off in tech stocks, as renewed trade war concerns rattled investors.

Nasdaq leads losses as tech sell-off weighs & trade war nerves rise, dragging S&P 500 lower - Nvidia & Tesla slide sharply

The Nasdaq Composite slid 2.2% on Wednesday, leading losses as a sharp sell-off in tech stocks and renewed trade war concerns soured investor sentiment.

The S&P 500 dropped 1.2%, while the Dow Jones Industrial Average dipped 119 points, or 0.3%.

Nvidia (NASDAQ:NVDA) shares tumbled more than 6% after Goldman Sachs downgraded the chip giant's stock to neutral from buy and slashed its price target to $550 from $780. The investment bank expressed concerns over Nvidia's high valuation, especially in the context of slower revenue growth in 2024.

Tesla (NASDAQ:TSLA) stock fell 5.5% after Credit Suisse downgraded the electric vehicle maker's stock to neutral from outperform and reduced its price target to $375 from $425. Analyst Vera Pelgas expressed concerns over slower-than-anticipated new vehicle demand in China and the potential impact on margins.

Investor sentiment weakened after the White House announced that President Donald Trump would unveil new auto import tariffs at a press conference on Wednesday, further intensifying fears of escalating trade tensions.

Major automakers reacted swiftly to the news, with General Motors (NYSE:GM) and Ford (NYSE:F) both shedding more than 1%, while Stellantis (NYSE:STLA) dropped 2%.

The announcement comes ahead of additional sector-specific trade levies, which are expected to be announced next week. However, Trump signaled that the tariffs may be more "lenient than reciprocal."

Data center stocks slump as TD Cowen warns of slower AI spending

Stocks tied to data center infrastructure suffered heavy losses, with Vertiv Holdings (NYSE:VRT) plunging 12%, not far from its worst one-day decline of July 2023.

The steep sell-off in Vertiv's stock follows a bleak assessment from TD Cowen, which warned that slower-than-anticipated AI-driven data center upgrades were putting pressure on demand, especially for hyperscale companies.

Hyperscalers are currently focused on optimizing existing infrastructure for higher densities, which in turn delays the need for new equipment purchases, explained analyst Charles PLC. Vertiv is a key beneficiary of the AI boom, which has sparked a surge in demand for new equipment to handle increased computing power.

Vertiv's stock had an outstanding run in 2024 so far, notching a 137% gain. Over the past 18 months, from the March 2023 low, the stock has soared 252%.

However, the stock is now down about 25% from its 52-week high, which was hit in February.

Other data center-related stocks also sold off in sympathy with Vertiv's sharp decline.

Coinbase (NASDAQ:COIN) trades lower as cautious crypto market vibes continue

Coinbase (NASDAQ:COIN) saw a pullback in trading volumes amid a cautious mood in the cryptocurrency market, but analysts at Rosenblatt Securities remain bullish on the exchange.

They advise investors to ‘buy the dip’ on Coinbase stock as they see huge potential in the build-out of USD Coin (USDC).

Coinbase shares slid 2.3% in Wednesday's premarket trading.

Coinbase is poised to benefit significantly from the growing demand for stablecoins, especially USD Coin, with which Coinbase shares a 50% revenue-liturgy deal.

“We think investors underestimate COIN's 'non-trading' revenue potential (especially in this political environment) and variable pay (which is a factor in our bullish view.”

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