S&P 500 drops 2.7%, Nasdaq plunges 3.6%, and global markets slide as escalating U.S.-China trade tensions spook investors
Trump’s Tariff Threat Wrecks Market Calm
A fragile calm on Wall Street shattered on Friday, October 10, as President Donald Trump threatened a “massive increase” in tariffs on Chinese imports. The announcement triggered the worst single-day decline in U.S. equities since April, with broad-based selling across all sectors.
Key Index Losses:
- S&P 500: –2.7% (–182.60 points to 6,552.51)
- Dow Jones Industrial Average: –1.9% (–878.82 points to 45,479.60)
- Nasdaq Composite: –3.6% (–820.20 points to 22,204.43)
“There seems to be no reason to meet with China,” Trump wrote on Truth Social, accusing Beijing of hostile trade practices involving rare earth exports.
Stocks Turn After Trump’s Social Media Post
Markets opened higher on optimism around tech and earnings, but Trump’s mid-day post flipped sentiment instantly. He criticized China’s export controls on rare earth metals, calling them a threat to global supply chains.
Rare earths are vital for everything from smartphones and EVs to defense equipment. China’s tightening of export regulations spooked investors, who fear a reignition of trade war tensions.
“We have been contacted by other countries who are extremely angry at this trade hostility,” Trump added.
Tech and Consumer Stocks Hit Hard
Technology stocks, which rely heavily on global supply chains, bore the brunt of the selloff.
- Nvidia, Apple, and Microsoft fell sharply
- Levi Strauss dropped 12.6%, despite beating earnings expectations
- Six out of every seven stocks in the S&P 500 declined
Levi’s dramatic plunge came after a strong year-to-date rally of 42%, suggesting elevated expectations and tariff fears drove the reversal.
Is the Market Overvalued?
The S&P 500 had risen 35% since its April low, leading some analysts to warn of excessive valuations.
“Prices have risen faster than profits,” said one market strategist.
“AI-driven gains remind some of the 2000 dot-com bubble.”
Artificial intelligence stocks, in particular, are under scrutiny as their valuations stretch without corresponding earnings growth.
Oil Markets React to Ceasefire and Trade Fears
Crude oil prices also tumbled as Middle East tensions eased and global demand concerns grew.
- U.S. crude: –4.2% to $58.90/barrel
- Brent crude: –3.8% to $62.73/barrel
The ceasefire between Israel and Hamas removed a key supply risk. Meanwhile, new tariffs could slow global trade, reducing demand for fuel.
Bonds Rally as Investors Seek Safety
Investors fled to safer assets, pushing bond yields lower.
- 10-year U.S. Treasury yield fell to 4.05% from 4.14%
- Drop accelerated after weak consumer sentiment data
The University of Michigan’s survey showed confidence remains fragile:
“High prices and weakening job prospects remain at the forefront of consumers’ minds,” said Joanne Hsu, survey director.
Inflation Expectations Ease Slightly
While inflation remains a concern, expectations have ticked down modestly:
- 1-year inflation outlook: 4.6% (down from 4.7%)
- 5-year forecast: steady at 3.7%
The shift may give the Federal Reserve more room to pause interest rate hikes, though Fed Chair Jerome Powell has kept options open.
Global Markets Follow U.S. Lower
Markets in Europe and Asia also declined, reacting to both Trump’s announcement and broader economic uncertainty.
- Hang Seng (Hong Kong): –1.7%
- CAC 40 (France): –1.5%
- Kospi (South Korea): +1.7% (bounced after holiday closure)
Why Did Wall Street Drop Today?
- Trump’s tariff threat reignited fears of a trade war with China
- Tech and consumer stocks plunged on supply chain worries
- Valuation concerns and AI bubble fears contributed to the sell-off
- Oil and bond markets reacted to geopolitical shifts and economic signals
Wall Street suffered its steepest drop since April after Trump threatened new tariffs on China. Major indices fell sharply, led by tech and consumer stocks, while oil prices slid on easing geopolitical tensions. Investors are growing cautious amid fears of renewed trade conflict and overvalued markets.
