A months-long calm on Wall Street was shattered on Friday as US stocks faced their steepest selloff in six months after former President Donald Trump warned of “a massive increase of tariffs on Chinese products” imported into the US.
The S&P 500 Index plunged 2.7%, wiping out its weekly gains in a single session, marking its worst day since April 10. The Nasdaq 100 Index dropped 3.5%, with the Magnificent Seven tech giants collectively losing 3.8%. Tesla Inc. and Amazon.com Inc. were among the biggest losers, while Nvidia Corp. slid nearly 5%.
Wall Street’s Cboe Volatility Index (VIX), widely considered the market’s “fear gauge”, jumped above 20 for the first time since April, signaling mounting investor anxiety.
Trump’s Tariff Threat Rekindles US-China Tensions
Risk appetite evaporated after Trump reignited fears of an escalating trade war, saying he saw “no reason” to meet Chinese President Xi Jinping following what he described as “hostile” export controls on rare-earth minerals.
“One countermeasure the U.S. is considering is a massive increase of tariffs on Chinese products coming into the United States,” Trump said, adding that “many other countermeasures are likewise under serious consideration.”
Dan Greenhaus, Chief Economist and Strategist at Solus Alternative Asset Management LP, noted that markets reacted sharply to the tariff comments. “The stock market clearly took a leg lower around the time of the ‘massive increase’ headline,” he said. “The tariff issue, for many investors, appeared settled. A ‘massive increase’ in tariffs upsets that status quo and requires a rethink.”
Broad-Based Decline Across Sectors
Rising tensions between the world’s two largest economies triggered a broad-based selloff across Wall Street. Nearly 84% of the S&P 500’s constituents, or more than 420 stocks, ended in the red, while just 15% advanced.
Ten of the 11 sectors in the S&P 500 traded lower. Technology led the decline, while consumer staples, typically considered a defensive sector — was the only gainer. PepsiCo Inc. emerged as the best-performing stock in the index, jumping 3.7% on the day.
A Goldman Sachs basket of unprofitable tech firms tumbled 4.3%, while the Russell 2000 Index shed 3%, marking its worst day since April. Stocks most vulnerable to tariffs fell sharply, with a UBS basket of tariff losers sliding 4.7%. The VVIX Index, which tracks volatility in the VIX itself, surged to its highest level since April.
Notable Movers: Qualcomm, Mosaic, and Applied Digital
Among individual stocks, Mosaic Co. was one of the S&P 500’s biggest laggards, plunging 9.2% after it revealed third-quarter phosphate production fell below expectations due to mechanical and utility disruptions at two facilities.
Qualcomm Inc. dropped 7.3% following reports of an antitrust probe in China concerning its acquisition of connected-vehicle technology firm Autotalks.
Meanwhile, Applied Digital Corp. defied the market downturn, soaring 16% after announcing it was in “advanced discussions with a hyperscaler client” to develop a second data center campus in North Dakota.
Analysts Urge Caution, Not Panic
Despite the selloff, market strategists urged investors not to overreact to the headline-driven slump.
“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.”
The recent selloff comes after a historic six-month rally in U.S. equities, fueled by optimism around artificial intelligence, strong corporate earnings, and expectations of a softer Federal Reserve stance on interest rates.
Focus Turns to Upcoming Earnings Season
With the tariff shock fresh in traders’ minds, attention is now turning to the upcoming corporate earnings season. The reporting cycle kicks off Tuesday with results from JPMorgan Chase & Co. and other major banks.
According to Bloomberg Intelligence, S&P 500 companies are expected to report 7.4% profit growth in the third quarter compared to a year earlier — the second-highest pre-season forecast in four years.
As volatility spikes and investor sentiment weakens, analysts say next week’s earnings could determine whether the recent selloff marks a temporary setback or the beginning of a broader correction.
(With Inputs From Bloomberg)
Read More – Trump Threatens Tech Export Limits, New 100% Tariff On Chinese Imports
