Stocks experienced a significant decline on Friday, with both the S&P 500 and Nasdaq seeing their largest one-day percentage drops since April 10. This drop was accompanied by a decrease in Treasury yields and a weakening U.S. dollar, driven by statements from U.S. President Donald Trump reigniting concerns about a potential U.S.-China trade conflict.
After the market closed on Friday, Trump announced an increase in tariffs on Chinese exports to the U.S. to 100% and the imposition of export controls on critical software in response to China’s recent export restrictions on essential rare earth minerals for technology and manufacturing. These declarations came following an earlier social media post by Trump hinting at new levies on Chinese goods and a possible cancellation of a meeting with President Xi Jinping.
Investors reacted with unease to the news, fearing the implications of an escalating trade war on the U.S. economy. Trump’s previous tariff announcement on April 2 had already triggered significant market volatility. Tech-related shares, particularly in the S&P 500 technology index and the semiconductor sector, suffered losses, as did U.S.-listed Chinese companies such as Alibaba Group Holding and JD.com Inc. Oil prices dropped over $2 per barrel amid concerns about trade tensions impacting demand, while spot gold climbed above the $4,000 per ounce mark.
Robert Pavlik, senior portfolio manager at Dakota Wealth, noted that Trump’s unexpected moves had injected uncertainty into a market already under scrutiny for its high valuations. By the market close, the Dow Jones Industrial Average had fallen by 878.82 points, the S&P 500 by 182.60 points, and the Nasdaq Composite by 820.20 points.
Earlier in the week, U.S. stock indexes had reached record highs, buoyed by Federal Reserve rate cut expectations and optimism surrounding AI-related deals. However, by the end of the week, all three major U.S. stock indices had recorded losses, with the S&P 500 reporting its most substantial weekly decline since May.
Globally, MSCI’s stock gauge dropped by 2.11%, European shares fell by 1.25%, and U.S. Treasury yields hit multi-week lows. The U.S. dollar weakened against the euro and yen following Trump’s statements, while commodity-linked currencies like the Australian dollar depreciated.
Overall, the markets reacted negatively to Trump’s trade-related announcements, leading to widespread declines in stocks, currencies, and commodities.
