US stock markets are expected to experience a significant decline from their record highs, as concerns over US export restrictions on China and remarks made by presidential candidate Donald Trump regarding Taiwan put pressure on technology shares. Futures for the Nasdaq 100 and S&P 500 have already begun to fall, down 1.2% and 0.7%, respectively, while Dow Jones Industrial Average futures slid around 0.2% after reaching an all-time high of 700 points on Tuesday.

The decline in stocks is primarily driven by fears surrounding potential risks to technology companies, outweighing the optimism surrounding possible interest rate cuts that have fueled the recent market rally. Particularly affected are heavyweight technology firms such as chipmaker Nvidia, which saw a decline of over 3% in pre-market trading.

Adding to the concerns, the Biden administration has reportedly signaled it may impose stricter restrictions on companies providing advanced chip technology to China, in addition to existing export curbs. ASML, a Dutch chip gear manufacturer, experienced a drop of approximately 7% in share prices after posting successful quarterly earnings, as the company is considered a potential target for these further restrictions.

In a recent Bloomberg interview, Donald Trump expressed doubts about the United States' defense support for Taiwan and suggested that the island, claimed by China, should bear the cost of US protection. This statement had a significant impact on chipmaker TSMC, whose shares fell over 3% in pre-market trading in New York, leading to a market value decrease of nearly $30 billion in Taiwan.

Despite these concerns, there is hope that positive corporate earnings could reverse the downward trend. Johnson & Johnson, United Airlines, and Discover are among the companies scheduled to release their quarterly results, and so far, earnings in various sectors have exceeded expectations.

Furthermore, today's economic data on housing starts and industrial production, along with the release of the Federal Reserve Beige Book, will provide valuable insights for investors trying to gauge the likelihood of a second rate cut in 2024.

Taking a broader perspective, the BofA monthly fund manager survey indicates growing speculation about a potential election sweep in November. According to the survey, 77% of respondents believe that a sweep would lead to higher bond yields, while 52% think it would result in a stronger US dollar. Interestingly, 48% of participants believe that an election sweep would have a positive effect on US stocks.

As trade concerns and political commentary continue to weigh on the markets, investors will closely monitor corporate earnings and economic data in the hopes of finding stability and direction for their investment strategies.