By Jonathan Mills in Markets — Apr 16, 2025

Nvidia's $5.5B China Export Writedown Sends Tech Futures Tumbling

Tech futures are tumbling after Nvidia revealed a shocking $5.5B loss tied to China exports. We explain exactly why this happened and what smart investors need to know right now.

Market Snapshot

Major indices showed mixed performance in early trading with S&P 500 down -0.22% to 5,394.28, Nasdaq relatively stable at -0.05% to 16,823.17, and the Dow Jones declining -0.26% to 40,417.46. The Russell 2000 continues its monthly struggle, down -4.1% MTD.

Market volatility remains elevated with the VIX at 30.12 (-2.49%), while futures signal continued anxiety. An unusual 2.1% divergence between Nasdaq futures and the cash index marks the largest gap since March 2025.

Notable movers include:

Netflix (NFLX): +4.85% to $976.28
MercadoLibre (MELI): +4.11% to $2,118.60
United Airlines (UAL): +6.1% pre-market on earnings beat
Nvidia (NVDA): -6.33% after-hours on $5.5B China export writedown
ASML (ASML): -7% on tariff uncertainty

Safe-haven flows continue with gold reaching $3,300/oz (+25% YTD), reflecting persistent inflation concerns.

Bottom Line: Today's market is dominated by tech sector volatility driven by US-China chip export restrictions, while financials outperform on strong bank earnings from Bank of America (BAC) and Citigroup (C).

Market Visualizations

Equity Market Performance: NASDAQ vs S&P 500

Source: Federal Reserve Economic Data (FRED), St. Louis Fed (https://fred.stlouisfed.org/series/NASDAQCOM) - Daily closing values through April 14, 2025 showing NASDAQ at 16,831.48 and S&P 500 at 5,394.28

Yield Curve Dynamics: 10-Year vs 2-Year Treasury Spread

Source: Federal Reserve Economic Data (FRED), St. Louis Fed (https://fred.stlouisfed.org/series/T10Y2Y) - Current spread of 51bps with 10-year at 4.35% and 2-year at 3.82%

Commodity Market Trends: CRB Index vs Global Prices

Source: Federal Reserve Economic Data (FRED), St. Louis Fed (https://fred.stlouisfed.org/series/CRB) - CRB Index at 352.21 with 2.22% YTD decline as of April 15, 2025

Pre-Market Pulse

Several significant catalysts are shaping today's pre-market sentiment:

United Airlines (UAL) surging +6.1% pre-market following stronger-than-expected earnings, potentially lifting the entire airline sector
Nvidia (NVDA) dragging down semiconductor stocks after announcing a $5.5 billion writedown related to China export restrictions
Boeing (BA) falling -2.34% pre-market on news of a China delivery halt
Treasury yields showing movement with the 2-year at 3.80% (-4.5bps overnight)
Nasdaq futures down 2.1% despite cash index stability, creating an unusual divergence that signals potential volatility

Sector Spotlight

Today's sector performance shows a clear divergence between financials and technology:

Financials: +1.2% (led by BAC, C)
Utilities: +0.23%
Technology: +0.16% (despite semiconductor weakness)
Communication Services: -20.47% (significant underperformer)

Within industries, we're seeing notable performance variations:

Semiconductors: -4.8% (dragged down by NVDA, ASML)
Airlines: +3.1% (boosted by UAL earnings)
Autos: +6.5% in Europe on tariff pause hopes
Energy: -1.23% despite oil stability, reflecting demand concerns

Bottom Line: Today's sector rotation shows a clear shift from growth to value, with financials benefiting from strong earnings while technology faces headwinds from geopolitical tensions and export restrictions. The significant underperformance in Communication Services warrants close monitoring as it may signal broader concerns about advertising revenue and consumer spending.

Economic Beat & Fed Watch

Today's economic calendar features several key releases:

US Retail Sales (12:30 ET):
- Expected: +1.3%
- Prior: +0.2%
Industrial Production:
- Forecast: -0.2%
NAHB Housing Index:
- Expected: 37
- Prior: 39

On the Fed front, Chair Powell is scheduled to speak at 17:30 ET, with markets particularly focused on his assessment of tariff impacts on inflation. Fed Fund Futures currently price a 40% chance of a June rate cut.

The yield curve continues to steepen, with the 10Y-2Y spread at 52bps, the widest since January 2025. This steepening typically signals economic growth expectations but could also reflect inflation concerns.

Inflation signals remain mixed with gold at $3,300 (+25% YTD) suggesting persistent inflation fears, while oil at $61 (Brent) reflects the IEA's demand cut forecast.

Bottom Line: Today's retail sales data will be crucial for assessing consumer strength amid persistent inflation. Powell's comments on tariffs could significantly impact rate cut expectations, with markets currently showing reduced confidence in near-term easing.

Corporate Central

Bank of America (BAC)

Shares up +3.6% after reporting Q1 earnings
EPS of $0.83 vs. $0.77 expected
Revenue of $25.8 billion vs. $25.3 billion expected
Net interest income stabilizing after previous declines

Why it matters: BAC's results suggest banking sector resilience despite higher-for-longer interest rates, with consumer spending remaining robust.

Nvidia (NVDA)

Shares down -6.33% after-hours
Announced $5.5 billion writedown related to China export restrictions
Follows expanded US controls on AI chip exports to China

Why it matters: This significant writedown highlights the growing impact of US-China tech tensions on even the strongest semiconductor players, potentially signaling longer-term headwinds for the sector.

United Airlines (UAL)

Shares up +6.1% pre-market
Q1 EPS of $1.71 vs. $1.15 expected
Revenue of $12.54 billion vs. $12.45 billion expected
Raised full-year guidance on strong travel demand

Why it matters: UAL's results suggest consumer travel spending remains resilient despite inflation pressures, potentially signaling broader strength in discretionary spending.

Boeing (BA)

Shares down -2.34% pre-market
China halts deliveries amid ongoing safety concerns
Follows previous production issues and regulatory scrutiny

Why it matters: This development compounds Boeing's existing challenges and threatens its recovery timeline, particularly as China represents a crucial growth market.

Global Market View

Currency Markets: USDCNH approaching 7.375 despite broader USD weakness, while EURCNH hit 8.338 (highest since 2014), reflecting growing tensions between China and Western economies
Bank of England: Rate path increasingly uncertain after softer-than-expected CPI data, potentially signaling earlier easing than previously anticipated
Commodities: Copper at $9,200/ton on industrial demand fears, reflecting growing concerns about global manufacturing activity
Energy Markets: International Energy Agency cut its 2025 oil demand forecast by 30%, signaling potential structural shifts in global energy consumption
Trade Relations: US probing pharma/semiconductor imports ahead of potential tariff implementation, while Canada secured a 6-month tariff relief on US goods

Market Spotlight: US-China Chip Restrictions Reshape Semiconductor Landscape

Today's semiconductor sector turbulence reflects the escalating impact of US export controls on China's access to advanced AI chips. Nvidia's announcement of a $5.5 billion writedown directly tied to these restrictions represents the largest single financial impact disclosed by any company thus far.

The Biden administration's expanded controls, announced last week, specifically target chips with performance characteristics that could advance China's AI and military capabilities. These measures go beyond previous restrictions by closing loopholes that allowed companies to modify chips to meet export compliance.

For investors, this development signals a fundamental shift in the semiconductor industry's global supply chain dynamics. Companies with significant China exposure face potential revenue gaps that may not be easily filled by other markets in the near term.

The ripple effects extend beyond direct chip manufacturers to equipment makers like ASML, which fell 7% today on related concerns about future sales restrictions. This broader impact suggests the semiconductor sector may face a period of recalibration as companies adjust to this new geopolitical reality.

Looking ahead, watch for potential retaliatory measures from China, which could include restrictions on rare earth exports or targeting of US companies with significant Chinese operations. The market is likely to reward companies with diversified geographic revenue streams and less exposure to US-China tensions.

Analyst Actions

Upgrade by Morgan Stanley to Overweight (from Equal Weight) with Price Target $1,200 (from $950) for Netflix (NFLX). Rationale: Stronger-than-expected subscriber growth and improving content monetization.
Downgrade by Goldman Sachs to Neutral (from Buy) with Price Target $850 (from $1,100) for Nvidia (NVDA). Rationale: China export restrictions creating significant near-term revenue uncertainty.
Upgrade by JP Morgan to Overweight (from Neutral) with Price Target $45 (from $38) for Bank of America (BAC). Rationale: Stabilizing net interest income and strong wealth management performance.
Downgrade by Barclays to Underweight (from Equal Weight) with Price Target $155 (from $180) for Boeing (BA). Rationale: China delivery halt compounds existing production and regulatory challenges.

Risk Radar

Escalating Tech Trade Tensions: The semiconductor export restrictions could trigger broader technology trade barriers between the US and China, potentially impacting a wider range of sectors.
Inflation Persistence: Gold's continued rise to $3,300/oz suggests persistent inflation concerns despite moderating official data, potentially forcing the Fed to maintain higher rates for longer.
Liquidity Concerns: The unusual 2.1% divergence between Nasdaq futures and the cash index may signal liquidity issues in certain market segments, warranting close monitoring for potential dislocations.

Look Ahead: What to Watch For

US Housing Starts (12:30 ET tomorrow) - Key indicator of residential construction activity
Fed Beige Book (18:00 ET) - Will provide regional economic conditions assessment ahead of the next FOMC meeting
Jobless Claims (12:30 ET) - Weekly labor market health check
Earnings Watch: Netflix (NFLX), American Express (AXP), and Blackstone (BX) report
Fed Chair Powell Speech Aftermath: Market reaction to today's comments on tariff impacts
China's Response: Potential countermeasures to US chip restrictions
Auto Tariff Negotiations: Progress updates on discussions between US and trading partners

Summary

Today's markets reflect growing tensions between the US and China in the technology sector, with Nvidia's $5.5 billion writedown highlighting the significant financial impact of export restrictions.

Meanwhile, strong bank earnings from Bank of America and Citigroup demonstrate financial sector resilience, creating a notable rotation from growth to value stocks.

Investors should closely monitor Fed Chair Powell's comments on tariff impacts, upcoming retail sales data, and potential retaliatory measures from China that could further reshape global markets.

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