US stock indices fell sharply on Friday. The move saw around $2 trillion in market value wiped off US equities, with indices having their worst day since April. This was when they tumbled in reaction to President Trump’s reciprocal tariff announcement. All the majors closed near their lows. The tech-heavy NASDAQ had the worst of it, losing 3.6%. But it was closely followed by the small cap Russell 2000, which dropped 3.0%. The S&P and Dow closed down 2.7% and 1.9% respectively.
The trigger for the move was President Trump’s response to news that China was placing fresh restrictions on the export of rare earth minerals and other critical manufacturing materials. Describing China’s decision as “hostile” and “extraordinarily aggressive”, Mr Trump threatened to pull out of trade talks while announcing a fresh 100% tariff on all US imports of Chinese goods. But sentiment improved over the weekend after Mr Trump posted that the US “wants to help China, not hurt it,” hinting that the fresh tariffs might not be implemented after all.
This shift in tone catalysed a strong rebound in US stock index futures in overnight trade. All the majors gapped higher with the NASDAQ leading the charge, having tacked on around 2% at the time of writing. But the fact that investors reacted so violently to a tariff threat from President Trump suggests that sentiment is somewhat fragile.
Source: TN Trader
US stock indices have steadily ground higher to a succession of all-time highs over the past five months or so. Companies involved in the development of artificial intelligence (AI) have been at the vanguard of these gains. But a flurry of recent deals, including OpenAI’s public announcements with NVIDIA, AMD, Oracle and CoreWeave, have raised concerns over the circulatory nature of much of recent AI investment.
In addition, it’s currently unclear how OpenAI can afford all its recent commitments. This comes as the US government shutdown drags into another week. Not only is this affecting the collection and publication of important government data releases, but there are also concerns over what will happen on 15th October, which is a key federal payroll date. Will government workers get paid? Meanwhile, earnings season begins in earnest this week, led by major US banks including Citigroup, JPMorgan, Goldman Sachs and Wells Fargo.
