TL;DR
US stocks dropped on Friday after President Donald Trump warned of big tariff hikes on Chinese goods and canceled a meeting with China’s President Xi Jinping. Technology and China-linked stocks fell the most, while rare earth mining stocks in the US rose sharply due to China’s export controls. The ongoing US government shutdown added uncertainty before the earnings season begins.
Trump threatens higher tariffs and cancels China meeting
President Donald Trump increased trade tensions by threatening to raise tariffs on goods from China. He announced this on his social media platform, Truth Social. Trump also canceled a planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. The cancellation signals growing strain in US-China relations.
China recently tightened controls on exports of rare earth minerals. These minerals are important for making electronics, electric vehicles, and military equipment. Trump called China “very hostile” and warned of “financial countermeasures” in response to these export restrictions.
Technology and China-linked stocks lead market losses
The US stock market reacted strongly to the news. The Dow Jones Industrial Average fell by 484 points or 1.05%, closing at 45,873.63. The S&P 500 dropped 0.8%, while the Nasdaq, which has many tech companies, lost 1.7%. Major tech stocks suffered heavy losses. Nvidia, Broadcom, and Tesla each fell more than 2%, while Advanced Micro Devices (AMD) dropped 7%. Chinese tech stocks trading in the US also fell sharply. Alibaba lost 5%, Baidu 5%, and JD.com fell 4.7%. At the same time, US companies that mine rare earth minerals saw their stocks rise. MP Materials gained 11%, and USA Rare Earth rose 15%. Investors expect these companies to benefit from China’s export restrictions.
Government shutdown adds to economic worries
The US government shutdown is now in its tenth day, causing delays in releasing official economic data. This has made investors rely on private reports to gauge the economy. The University of Michigan’s consumer sentiment index showed that Americans are still worried about high prices and job security. Consumer confidence stayed low, near 55 points in October, compared to over 70 points a year ago.
Investors prepare for a tough earnings season
All major US stock indexes are set for weekly losses. The S&P 500 is on track to end the week down about 1%, breaking a recent streak of gains. Investors are closely watching the start of the earnings season next week. Banks like JPMorgan Chase and Citigroup will release their quarterly results. Analysts expect companies to face pressure from ongoing trade disputes and economic uncertainty.
FAQs- What caused the US stock market to fall sharply on Friday?
President Trump threatened to raise tariffs on Chinese goods and canceled a meeting with China’s President Xi Jinping, increasing trade tensions. - Which stocks were most affected by the market drop?
Technology and China-linked stocks fell the most, while US rare earth mining stocks rose due to China’s export controls. - How has the US government shutdown affected the market?
The shutdown delayed official economic data, forcing investors to rely on private reports that show weak consumer confidence.
