New York: U.S. stocks suffered their worst day in months on Friday after President Donald Trump threatened a “massive increase of tariffs” on Chinese imports, rattling investors and triggering widespread losses across the market.
The S&P 500 sank 2.7%, marking its steepest decline since April, while the Dow Jones Industrial Average dropped 878 points (1.9%), and the Nasdaq Composite fell 3.6%. The sell-off erased gains from earlier in the day, as Trump posted on Truth Social that China had taken “extraordinarily aggressive” steps by restricting rare earth exports, which are vital for electronics, electric vehicles, and defence industries.
Tariff threat rattles global markets
Trump’s comments also cast doubt on his planned meeting with Chinese President Xi Jinping during the upcoming Asia-Pacific Economic Cooperation (APEC) Summit in South Korea. “Now there seems to be no reason to meet” with Xi, Trump wrote.
Markets reacted sharply, with nearly six out of seven S&P 500 stocks falling, including Big Tech giants like Apple and Nvidia. Analysts said the index was already at elevated levels after a nearly 35% run since April, leaving valuations high relative to corporate earnings.
Companies in artificial intelligence and tech sectors were particularly hit, with concerns that overvalued stocks could see sharper corrections. Apparel firm Levi Strauss fell 12.6%, despite reporting quarterly profits in line with expectations, reflecting investor sensitivity to high-flying stocks after strong annual gains.
Oil and bonds also impacted
Oil prices dropped as well, with U.S. crude falling 4.2% to $58.90 per barrel and Brent crude down 3.8% to $62.73. Prices eased following a ceasefire in Gaza, reducing supply disruption worries. In the bond market, the 10-year Treasury yield fell to 4.05%, reflecting concerns over slowing economic growth and consumer sentiment.
Consumer sentiment and Fed outlook
A preliminary survey by the University of Michigan suggested U.S. consumers remain wary of high prices and softening job prospects. Federal Reserve officials have indicated potential interest rate cuts next year to support the economy, though inflation concerns may influence their decisions.
Global market impact
Markets abroad also reacted negatively, with Hong Kong’s Hang Seng falling 1.7% and France’s CAC 40 dropping 1.5%, while South Korea’s Kospi rose 1.7% after reopening post-holiday. Analysts warned that the escalating U.S.-China trade tensions could disrupt global supply chains and financial markets in the months ahead.