The plunge in US stocks reflects deep economic anxiety

On April 16, Eastern Time, Federal Reserve Chairman Powell issued a severe warning about the inflation risks caused by US trade policies in a public speech, saying that tariff policies are "very likely" to push up inflation and last for a long time. This hawkish statement quickly caused market panic, and the three major US stock indexes collectively plummeted, with the chip sector becoming the hardest hit area, reflecting investors' deep concerns about the increasing uncertainty in the global economy.

In his speech at the Chicago Economic Club, Powell emphasized that tariff policies will significantly raise short-term inflation levels and may form long-term pressure through supply chain transmission. He also hinted that if inflation conflicts with employment goals, the Federal Reserve may give priority to tightening monetary policy to control prices. This statement directly shattered the market's expectations of the Federal Reserve's short-term interest rate cuts, and the 10-year US Treasury yield rose in response, and safe-haven funds accelerated to safe assets such as gold. The spot gold price broke through $62 per barrel that day, setting a record high, while international oil prices fell under pressure due to demand concerns.

Affected by Powell's remarks, technology stocks became the main force leading the decline. Nvidia plunged 6.9% in a single day, and its market value evaporated by $188.1 billion, creating the largest single-day drop this year. Chip giants such as AMD and Micron Technology all fell by more than 7%, and the Philadelphia Semiconductor Index once fell by 6.2%, with a total market value of about $100 billion. Behind the industry's predicament is the resonance effect of multiple negative factors: the continued escalation of US chip export restrictions on China, the weak global semiconductor demand leading to high inventories, and the reduction of performance guidance by companies during the earnings season, the market's pessimistic expectations for the turning point of the industry cycle have fermented comprehensively. ASML's share price plunge caused by its earnings report falling short of expectations has cast a shadow on the market's outlook for the chip manufacturing industry chain. The current US economy presents a complex pattern of "high inflation but weak growth". Although Powell downplayed the risk of economic recession, data such as the slowdown in GDP growth in the first quarter, weak consumer spending, and high corporate inventories all point to insufficient endogenous economic momentum. Against this backdrop, the market is deeply divided over the direction of the Fed's policy: the interest rate swap market is still betting on a rate cut this year, but Powell's vague statement of "waiting for more signals" has caused investors to repeatedly swing between the two possibilities of "policy shift" and "economic hard landing". This uncertainty is further amplified during the earnings season - although giants such as JPMorgan Chase have delivered performance that exceeds expectations, they have made large provisions for loan losses, reflecting the extreme caution of companies about the economic outlook.

At a deeper level, the plight of the chip industry reflects the pain of global supply chain reconstruction. The US technology blockade against China has forced chip companies to adjust their production capacity layout, but the huge investment and long construction cycle of new wafer fabs make it difficult for the industry to get rid of cost pressure in the short term. At the same time, the computing power demand generated by the AI ​​boom has not been fully converted into chip orders. Although giants such as Nvidia maintain their lead in the field of AI chips, the downturn in the traditional consumer electronics market continues to suppress performance. Against this backdrop, chip manufacturers have to face the embarrassing situation of "high investment and low returns", and the industry reshuffle may accelerate.

Looking ahead, Powell's hawkish stance and market concerns about economic recession will continue to compete. If subsequent inflation data exceeds expectations, the Fed may be forced to restart rate hikes, and high-valuation technology stocks will still face adjustment pressure. Whether the chip industry can get out of the cold winter depends on whether global demand can substantially recover and whether the supply chain reconstruction can effectively reduce corporate costs. With multiple uncertainties intertwined, the market may remain volatile in the short term, and investors need to pay close attention to the signals released by corporate financial reports and economic data.