The S&P 500 dropped 182.60 points, or 2.71%, to 6,552.51, the Dow Jones Industrial Average dropped 878.82 points, or 1.90%, to 45,479.60, and the Nasdaq Composite dropped 820.20 points, or 3.56%, to 22,204.43.
Following Beijing’s tightening of its rare earth limitations, U.S. President Donald Trump intensified his trade war with China, which caused Wall Street to plummet on Friday.
Trump’s statement late Friday, during Wall Street’s formal trading period, that he would put export limits on crucial U.S.-made software and a further 100% tax on imports from China sent Big Tech shares down.
Following the bell, Nvidia, Tesla, Amazon, and Advanced Micro Devices all had declines of more than 2%.
Following Trump’s warning in a post on Truth Social earlier in the day that he was considering a “massive tariff increase” on Chinese imports and that there is no reason to meet with China’s President Xi Jinping in two weeks as scheduled, those losses exacerbated already sharp declines during Friday’s trading session. He also added that “many other countermeasures” are being considered.
Trump’s most recent action against China startled markets and raised the possibility of further deteriorating the already tense ties between the two biggest economies in the world.
Before markets continued their losses after the bell, all three of the main U.S. stock indexes had significant selloffs throughout Friday’s session.
The Nasdaq and S&P 500 had their worst one-day percentage declines since April 10. The S&P 500 had its worst weekly decrease since May, while the Nasdaq saw its sharpest Friday-to-Friday decline since April.
According to Ryan Detrick, chief market strategist at Carson Group in Omaha, “the second biggest economy and the first largest economy are bickering again, and we are seeing a sell first, ask questions later mindset to conclude the week.” “There was some tremendous volatility since President Trump’s tweet really came out of nowhere.”
Detrick went on to say, “And it is crucial to realize we have not experienced this kind of volatility in a long time.” “One might argue that this October was due for some spookiness.”
Since his April 2 “Liberation Day” tariff announcement, Trump’s unpredictable trade policies have caused market tremors and volatility across asset classes due to his on-again, off-again trade discussions.
The S&P 500 dropped 182.60 points, or 2.71%, to 6,552.51, the Dow Jones Industrial Average dropped 878.82 points, or 1.90%, to 45,479.60, and the Nasdaq Composite dropped 820.20 points, or 3.56%, to 22,204.43.
Following Trump’s remarks, the Semiconductor Index of the Philadelphia Stock Exchange fell 6.3%.
More than 90% of the processed rare earths and rare earth magnets used in everything from military radars to electric cars and airplane engines are made in China.
Significant supply chain disruptions might result from an intensifying trade war between the two biggest economies in the world, especially for the military, electric car, and technology sectors.
Considered a measure of market apprehension, the CBOE Volatility Index hit its highest closing level since June 19.
Shares of Chinese firms listed in the United States saw a steep decline, with industry titans Alibaba Group Holding, JD.com Inc., and PDD Holdings seeing declines of 5.3% to 8.5%.
After China’s market watchdog said that the nation had opened an antitrust probe against the chip maker for acquiring Israel’s Autotalks, Qualcomm’s stock dropped 7.3%.
Due to a legislative deadlock that has so far produced little indications of meaningful discussion or progress, the U.S. government is presently on its tenth day of closure. This has caused a data blackout, delaying official government economic figures for the time being.
Independent data sources continue to provide data, however. According to the University of Michigan’s preliminary analysis, consumer mood in October is hovering around record lows as rising costs and deteriorating employment opportunities continue to be the top concerns for consumers.
Investors turn to the U.S. Federal Reserve for hints about potential interest rate reductions in the near future when official data is unavailable.
According to Fed Governor Christopher Waller, the central bank should exercise prudence when lowering the Fed funds target rate as it assesses the economy, even if private employment data still indicates labor market weakness.
In agreement, St. Louis Fed President Alberto Musalem said that another rate decrease could be necessary as a safeguard against a contracting labor market. He said that before monetary policy becomes too accommodating, “I think that we ought to proceed with prudence.”
Tuesday will mark the unofficial start of the third-quarter earnings season when a number of major financial institutions, including JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo, disclose their quarterly results.
According to LSEG data, analysts now see an overall 8.8% year-over-year rise in S&P 500 profits for the third quarter, up from 13.8% last quarter and 9.1% in Q3 2024.
On the NYSE, declining issues outnumbered advancers by a ratio of 4.36 to 1. The NYSE saw 167 new lows and 215 new highs.
The Nasdaq had a 4.93-to-1 ratio of declining issues to advancers, resulting in 799 equities rising and 3,936 falling.
The Nasdaq Composite had 102 new highs and 145 new lows, while the S&P 500 saw 18 new 52-week highs and 19 new lows.
In contrast to the average of 20.15 billion shares for the whole session during the previous 20 trading days, the volume on U.S. exchanges was 24.26 billion shares.