The multi-year US-China trade war worsened again yesterday. The media reported that the Biden administration is considering a cap on AI chip exports by U.S. companies.
The government already imposed severe export restrictions on China. However, Nvidia (NVDA) offered a lower-powered server AI GPU and desktop GPU that met restriction requirements.
This time, the U.S. is reportedly focused on Persian Gulf countries. It would set a ceiling on export licenses, citing national security. The U.S. likely suspects that such countries are buying American products on behalf of China.
In the coming days, Intel (INTC), Advanced Micro Devices, and Nvidia may comment on the government action. In the near term, traders will need to prepare for Nasdaq (QQQ) losing 1.0% daily. This hurts the S&P 500 (IVV), the Russell 2000 (IWM), and the Dow Jones.
Stocks that fell after the rumor included Qualcomm (QCOM), Microchip (MCHP), NXP Semiconductor (NXPI), Applied Materials (AMAT), and Arista Networks (ANET). Before this speculation surfaced, Nasdaq’s ETF, QQQ, was about to break above its 52-week high of $503.52. Instead, it closed at $490.85. The support level is below $480. If the ETF falls below that, $452 is the next support level at the 200-day simple moving average.