Trump-China Tariff Dispute Sends S&P 500 To Biggest Drop In Six Months
The S&P 500 Index fell 2.7 per cent, erasing its weekly gains in its worst session since 10 April, when similar tariff-related anxieties rattled investors.
A months-long period of relative calm on Wall Street ended abruptly on Friday, as US stocks recorded their steepest losses in six months following President Donald Trump’s threat of a “massive increase of tariffs on Chinese products” imported into the United States.
The S&P 500 Index fell 2.7 per cent, erasing its weekly gains in its worst session since 10 April, when similar tariff-related anxieties rattled investors. The Nasdaq 100 Index slumped 3.5 per cent, while a basket tracking the “Magnificent Seven” technology giants dropped 3.8 per cent, led by sharp declines in Tesla Inc. and Amazon.com Inc. Nvidia Corp. slid nearly 5 per cent.
The Cboe Volatility Index (VIX) — Wall Street’s so-called “fear gauge” — surged above 20 for the first time since April, signalling rising investor unease.
Trade War Jitters Return
Market sentiment soured after Trump said he saw “no reason” to meet Chinese President Xi Jinping, citing Beijing’s “hostile” export controls on rare-earth minerals. He added that Washington was considering “a massive increase of tariffs on Chinese products coming into the United States of America,” and hinted at “many other countermeasures” under review.
The comments reignited long-dormant trade war fears, triggering a broad selloff. More than 420 of the 500 companies in the S&P 500 or roughly 84 per cent, finished lower, while only 15 per cent gained.
Tech Stocks Lead Declines
Ten of the eleven sectors in the S&P 500 closed in negative territory, with technology shares leading the slide. The consumer staples sector was the only gainer, as investors sought safety in defensive stocks. PepsiCo Inc. emerged as the day’s standout performer, rising 3.7 per cent.
Highly speculative assets were hit hardest. A Goldman Sachs basket of unprofitable technology firms tumbled 4.3 per cent, while the Russell 2000 Index of smaller companies shed 3 per cent, marking its worst day since April. The UBS basket of stocks exposed to tariff risks declined 4.7 per cent, and the VVIX Index — which measures volatility in the VIX itself — climbed to its highest level since April.
Company-Specific Moves
Among individual names, Mosaic Co. was one of the biggest S&P 500 decliners, sliding 9.2 per cent after reporting lower-than-expected phosphate production due to mechanical and utility issues at two plants.
Qualcomm Inc. dropped 7.3 per cent amid reports of an antitrust probe in China related to its acquisition of connected-vehicle technology firm Autotalks. Meanwhile, Applied Digital Corp. surged 16 per cent after announcing it was in advanced talks with a hyperscaler client for a second data centre campus in North Dakota.
Analysts Urge Calm Despite Selloff
“After one of the best rallies in history in a six-month span, it shouldn’t be much of a surprise that the market can easily catch the jitters off of headline risk,” said David Wagner of Aptus Capital Advisors. “This is normal, but not a reason to turn pessimistic on the market.”
Attention now shifts to the upcoming corporate earnings season, beginning Tuesday with results from JPMorgan Chase & Co. and other major banks. S&P 500 earnings are forecast to grow 7.4 per cent year-on-year in the third quarter, according to Bloomberg Intelligence — the second-highest pre-season estimate in four years.
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