Stocks took a significant hit on Friday, as both the S&P 500 and Nasdaq experienced their largest one-day percentage declines since April 10. This decline was accompanied by a drop in Treasury yields and a weakening of the U.S. dollar, following remarks made by U.S. President Donald Trump that reignited concerns about a potential U.S.-China trade war.
After the markets 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 retaliation against China’s restrictions on rare earth minerals crucial to various industries. Prior to this announcement, Trump had hinted at additional levies on Chinese goods and even threatened to cancel a meeting with President Xi Jinping.
The news of these escalating trade tensions caused market turbulence and raised fears about the impact of the trade war on the U.S. economy. Earlier in April, Trump’s tariff announcement triggered significant market volatility. Technology-related stocks bore the brunt of the sell-off, with the S&P 500 technology index dropping by four percent and semiconductor stocks declining by 6.3%. U.S.-listed Chinese companies also saw their shares plummet, with Alibaba Group Holding falling by 8.4% and JD.com Inc. by 6.2%.
Oil prices dipped more than $2 per barrel due to trade concerns affecting demand forecasts, while spot gold surged above the $4,000 per ounce mark. The sudden market reaction prompted Robert Pavlik, a senior portfolio manager at Dakota Wealth, to comment on the uncertainty Trump’s actions introduced into an already scrutinized market.
By the market close, the Dow Jones Industrial Average was down 1.90% at 45,479.60, the S&P 500 fell by 2.71% to 6,552.51, and the Nasdaq Composite dropped by 3.56% to 22,204.43. These losses marked a reversal from earlier record highs driven partly by expectations of Federal Reserve rate cuts and optimism surrounding AI-related deals.
Global stocks, as measured by MSCI, declined by 2.11% to 972.51 points, while European shares erased weekly gains by closing 1.25% lower. U.S. Treasury yields hit multi-week lows, with investors seeking safer assets following Trump’s statements. The U.S. dollar also weakened, boosting the euro and yen against the greenback, while commodity-linked currencies like the Australian dollar declined.
Market movements were impacted by various geopolitical events, including concerns in Japan over potential interest rate hikes and leadership changes in France. U.S. crude and Brent oil prices dropped, while spot gold prices rose. Overall, these developments highlighted the fragility of financial markets amid escalating trade tensions and geopolitical uncertainties.
