Indexes were set to open lower on Wednesday, as declines in major chip and tech stocks led broad-based market losses amid a slew of corporate results and the prospect of tougher U.S. trade restrictions being imposed on Chinese chips.

A report that the Biden Administration was considering severe trade restrictions as part of a chip clampdown against China weighed on semiconductor stocks in premarket trading.

AI-chip favorite Nvidia tumbled 3.8%, while ASML's U.S.-listing lost 8.2%.

In other moves, U.S.-listed shares of Taiwan Semiconductor Manufacturing shed 6.0% after Republican presidential candidate Donald Trump said Taiwan should pay the U.S. for its defense.

Marvell Technology, Broadcom, Qualcomm, Micron Technology, Advanced Micro Devices and Arm Holdings were also down between 3% and 4.7%.

All the so-called "Magnificent Seven" megacap stocks slumped, with Apple, Microsoft Meta Platforms and Tesla down between 1% and 2.1%.

The possibility of a fresh crackdown on China trade could be the negative trigger investors were waiting for to start booking profits in tech stocks, according to Ahmed Azzar, financial market analyst at Equiti Group.

Futures tracking the Russell 2000 fell 0.6% after the small-cap index rallied nearly 12% over the last five sessions.

Signaling growing investor unease, Wall Street's "fear gauge" was trading at its highest level in six weeks.

The Dow Jones Industrial Average and the S&P 500 had closed at all-time highs on Tuesday.

After a blistering rally in tech companies since the last leg of 2023, investors have begun moving out of expensive megacaps to underperforming areas of the market.

"I'm still optimistic that the market is not as expensive as maybe it's feared, but that's because we're so overbought that some near-term selling pressure is likely to develop," said Robert Pavlik, senior portfolio manager at Dakota Wealth, adding that he had also taken some profits in tech.

Firmer bets on a Fed rate cut in September as well as rising expectations that former President Donald Trump will be back in the White House in November following the attempt on his life have helped lift stocks in the last few sessions.

Investors will focus on comments from Fed officials Thomas Barkin and Christopher Waller later in the day for clues on how policymakers have assessed recent economic data.

The New York Fed's John Williams said in an interview that the central bank was "getting closer" to a point where it could start cutting interest rates.

On the earnings front, J&J was flat, paring losses after the drug and devices maker lowered its annual earnings forecast.

Industrial production data for June is also due before markets open.

At 8:40 a.m. ET, Dow e-minis were down 116 points, or 0.28%, S&P 500 e-minis were down 55 points, or 0.96%, and Nasdaq 100 e-minis were down 300.75 points, or 1.46%.

Among others, U.S. drugmaker Eli Lilly fell 3.4% after Swiss rival Roche's promising early-stage data from an experimental obesity pill.

Spirit Airlines slumped 4% after lowering its second-quarter revenue outlook, citing lower-than-expected non-ticket revenue.

Northern Trust rose 2.1% after the asset and wealth manager reported a jump in second-quarter profit on higher fees and an accounting gain.

 - Reuters