Wall Street ended the week sharply lower Friday after President Donald Trump threatened a “massive” increase in tariffs on Chinese imports, rattling investors and reigniting trade war fears.
The Dow Jones Industrial Average plunged 878.82 points, or 1.9%, to close at 45,479.60. The S&P 500 fell 2.71% to 6,552.51 — its worst single-day drop since April — and the Nasdaq Composite sank 3.56% to 22,204.43. Earlier in the day, the Nasdaq had reached a new all-time intraday high before the sell-off intensified.
Trump posted on Truth Social that he may cancel his upcoming meeting with Chinese President Xi at the APEC summit in South Korea, accusing China of becoming “very hostile” and threatening new tariffs. He also charged that Beijing was “holding the globe captive” through its control of rare earth metals, essential to the technology and defense sectors.
China recently tightened export controls on rare earth elements, requiring foreign firms to obtain a license for any products containing 0.1% or more of the materials. Investors reacted swiftly, dumping shares in companies most exposed to Chinese trade. Nvidia shares fell 5%, AMD lost nearly 8%, and Tesla dropped around 5%.
The CBOE Volatility Index, known as Wall Street’s “fear gauge,” spiked above 22, ending a four-month stretch of relative calm. Traders rushed to hedge against deeper declines in U.S. equities.
Technology companies bore the brunt of the losses. Analysts noted that large-cap tech firms make up about half of the S&P 500, meaning renewed trade tensions with China have an outsized impact on the broader market.
The tariff threat came against the backdrop of a government shutdown now in its tenth day. The Senate failed for the seventh time Thursday to pass competing funding measures, deepening concerns about economic disruption. The Trump administration confirmed that layoffs of federal employees had begun.
The week’s losses erased earlier gains, with the S&P 500 down 2.4% for the week, the Nasdaq off 2.5%, and the Dow falling 2.7%.
Source: CNBC