The S&P 500 fell 1.5% and was on track for its biggest loss since August 1. The Dow Jones Industrial Average was down 456 points, or 1%, as of 11:35 a.m. Eastern time, and the Nasdaq composite was down 2.2%.
Stocks were on track for a slight increase this morning until Trump said on his social media platform that he is considering “a massive increase in tariffs” on Chinese imports. He is angry about restrictions China has imposed on exports of its rare earth metals, materials crucial to the production of everything from consumer electronics to jet engines.
“We have been contacted by other countries extremely angry about this major trade hostility that came out of nowhere,” Trump wrote on Truth Social. He also said he now sees “no reason” to meet Chinese leader Xi Jinping as part of an upcoming trip to South Korea.
Rising trade tensions between the world’s two largest economies caused a widespread decline on Wall Street, with three out of four stocks within the S&P 500 falling.
Levi Strauss fell 12.3%, marking one of the market’s biggest losses, even as the company reported stronger last-quarter profit than analysts expected. Full-year profit expectations were also within Wall Street ranges, but the jeans and apparel company could face the challenge of high expectations. The share price came into the day with a whopping gain of almost 42% for the year to date. The rest of the market is facing similar pressures. The market was near record highs after rising in eight of the past 10 days.
Critics call the market too expensive after prices rose much faster than corporate profits, especially for companies in the artificial intelligence industry. For stocks to look cheaper, prices have to fall or profits have to rise.
The US stock market has been on an almost brutal run, rising about 35% since its April low, although momentum has waned recently. With the US government under another shutdown, several key economic reports that normally move the market have been postponed.
Friday’s strongest action also came in the oil market, where the price of a barrel of U.S. crude fell 3.6% to $59.27.
It came about as a ceasefire between Israel and Hamas took effect in Gaza, raising hopes for less violence in the Middle East. An end to the war could ease concerns about oil supply disruptions that had kept crude oil prices higher than they otherwise would have been.
Brent crude, the international standard, fell 3.3% to $63.08 a barrel.
On the bond market, the yield on ten-year government bonds fell from 4.14% at the end of Thursday to 4.06%.
On foreign stock markets, indexes fell in much of Europe and Asia.
Hong Kong’s Hang Seng fell 1.7%, and Japan’s Nikkei 225 fell 1% for two of the bigger moves. But South Korea’s Kospi rose 1.7% after trading reopened after a holiday.
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