At closing bell, the 225-issue Nikkei Stock Average tumbled 241.59 points, or 1.04%, to 23,032.54. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 15.49 points, or 0.96%, to 1,605.40.
Ten of the 11 major S&P sectors were lower, with only the defensive utilities group edging higher. Technology shares led selloff as investors fled the high flyers, meanwhile energy shares also slumped as oil prices fell below $40 a barrel.
U.S. President Donald Trump's administration is considering imposing export restrictions on SMIC, according to a Defense Department spokesperson. The potential move by Washington would mark a major escalation in the tech battle between the U.S. and China.
Tesla plunged, as the electric-car maker was excluded from a group of companies being added to the S&P 500. Investors had widely expected its inclusion after a blockbuster quarterly earnings report in July. Up to Friday's close, the stock had surged about 400% this year.
Tech stocks tumbled on profit booking. Shares of Apple, Microsoft, and Facebook slumped along with top work-from-home plays including Zoom Video and Docusign. Apple's wiped out almost $140 billion in market value Tuesday, while its three-day slide swelled to 14%, the most since October 2008.
JPMorgan Chase & Co fell after a report it was probing employees who were allegedly involved in the misuse of funds intended for COVID-19 relief.
Elon Musk's firm tumbled further after General Motors announced a stake in rival electric-vehicle manufacturer Nikola Motors. Nikola surged on news of the deal.
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