Dow Plummets Almost 900 Points, S&P 500 Declines Sharply After Trump’s China Tariff Threat

The stock market experienced a dramatic sell-off on Friday, October 10, as President Donald Trump’s threat of higher tariffs on China sent shockwaves through the financial markets. The Dow Jones Industrial Average closed down 878.82 points, or 1.9%, at 45,479.60, while the S&P 500 lost 2.71% to settle at 6,552.51. The Nasdaq Composite fared even worse, tumbling 3.56% to 22,204.43, with its decline marking the largest since April 10.

Market Reaction

The market reaction was swift and decisive, with stocks accelerating their selling into the close. The Nasdaq had earlier hit a new all-time intraday high before Trump’s comments, but the tariff threat blew that away. Tech stocks with significant exposure to China were among the hardest hit, with Nvidia falling nearly 5%, AMD plummeting 8%, and Tesla shedding 5%. Oil prices also dipped, with U.S. crude sliding as traders feared slowing global demand if tariffs drag out.

Trump’s Tariff Threat

Trump’s threat of higher tariffs on China comes amid escalating tensions between the two nations. In a post on Truth Social, Trump stated that he was considering a “massive increase of tariffs on Chinese products coming into the United States of America.” He accused China of holding the globe “captive” using its rare earth metals resources, which are critical components in tech and defense industries.

Impact on Markets

The markets reacted negatively to Trump’s comments, with expectations for a China trade deal being swept off the table. “Expectations for a China trade deal just got swept off the table,” said Jeff Kilburg, founder of KKM Financial. “Profit takers are out in full force.” The S&P 500 shed over $1.5 trillion in value, while the CBOE Volatility Index (VIX), a measure of market fear, spiked above 22.

Cryptocurrency Market

The cryptocurrency market was not immune to the sell-off, with Bitcoin crashing to around $116,200, down nearly 4% on the day. Ethereum slid almost 8% to $3,975, and Solana dipped more than 7% to $205. Over $1.28 billion worth of crypto positions were wiped out in liquidations over the last 24 hours.

Outlook

Despite the sharp decline, some analysts remain optimistic about the bull market. Analysts at UBS believe that the strong recovery since 2022 will continue, while JPMorgan upgraded NetEase, the gaming company. However, other analysts cautioned that the escalating trade tensions could persist, and investors should be prepared for further volatility.

Conclusion

The stock market’s sharp decline on Friday serves as a reminder of the risks associated with trade tensions between the U.S. and China. As the situation continues to unfold, investors will be watching closely for any signs of a resolution or further escalation. One thing is certain: the markets will remain volatile until the uncertainty is resolved.