Markets Plunge as Trump Threatens Tariffs, S&P 500 Sees Worst Drop Since April

# Markets Plunge as Trump Threatens Tariffs,  Sees Worst Drop Since April

**Note**: This analysis is generated after US market close. Event times in US Eastern Time.

## Market Commentary

**Closing Bell: Overall Market Wrap-Up**

Today marked a turbulent session on Wall Street, culminating in a significant sell-off driven by escalating U.S.-China trade tensions. The Dow Jones Industrial Average plummeted nearly 900 points, closing down 1.90%, while the S&P 500 and Nasdaq fared even worse, declining 2.71% and 3.49%, respectively. This sell-off represented the worst performance for the S&P 500 since April, highlighting the sensitivity of investors to geopolitical risks. The market’s volatility was further exacerbated by the ongoing U.S. government shutdown and the looming threat of increased tariffs on Chinese imports, which weighed heavily on investor sentiment.

**US Market: Performance of US Indices and Key Drivers**

The major U.S. indices all closed in the red, with the Dow Jones dropping to its lowest levels in nearly three weeks. The S&P 500 and Nasdaq experienced their most significant declines in months, reflecting a broader market anxiety. The catalyst for today’s downturn was a post by President Donald Trump on Truth Social, threatening a “massive increase” in tariffs on Chinese goods. Trump’s remarks, accusing China of becoming “very hostile,” reignited fears of a trade war, prompting a rapid sell-off across sectors.

Investor sentiment was further dampened by the ongoing government shutdown, which has led to delays in essential economic data releases, including the Consumer Price Index (CPI) report. The uncertainty surrounding the shutdown and its potential economic ramifications have left investors on edge, contributing to the day’s market volatility.

**Stocks: Notable Stock Movements and Sector Highlights**

Tech stocks were particularly hard hit, with the Nasdaq 100 experiencing a staggering decline of 3.49%. Notable stocks included Alibaba and MP Materials, both of which suffered significant losses amid the renewed trade tensions. The auto sector also faced challenges, with concerns over supply chain disruptions following the fallout from the recent implosions of parts suppliers and lenders.

In contrast, gold prices surged to record highs above $4,000 as investors sought safe-haven assets amid the turmoil. The “debasement trade,” driven by fears of inflation and a weakening dollar, has led to increased demand for gold and cryptocurrencies, with Morgan Stanley easing restrictions on wealth clients’ access to crypto funds.

**News from the World Geopolitics and Economy**

Global markets were influenced by a slew of geopolitical developments. The threat of renewed tariffs on Chinese goods raised concerns about the potential for a trade war, impacting not just U.S. markets but also emerging currencies, which saw declines against the dollar. The Australian dollar, in particular, fell to a one-month low as investors reacted to the heightened tensions.

Additionally, the ongoing government shutdown in the U.S. has created uncertainty regarding economic data releases, with the Labor Department planning to recall staff to work on critical reports. This uncertainty has further complicated the market landscape, as investors grapple with potential economic fallout.

**Europe Markets: Performance of European Indices and Influences**

European markets mirrored the negative sentiment from the U.S. session, with major indices such as the DAX, CAC 40, and FTSE 100 all closing lower. The DAX fell by 1.50%, while the CAC 40 and FTSE 100 declined by 1.53% and 0.86%, respectively. The political landscape in Europe was also a factor, with concerns surrounding French politics following the reappointment of Prime Minister Sébastien Lecornu, highlighting instability within the region.

Overall, the combination of U.S.-China trade tensions, a government shutdown, and political uncertainties in Europe has created a challenging environment for investors. As we look ahead, market participants will be closely monitoring developments in these areas, particularly any shifts in U.S. trade policy and the resolution of the government shutdown. The volatility witnessed today underscores the importance of geopolitical events in shaping market dynamics, as investors navigate through a complex and often unpredictable landscape

## Performances

### Indices

### FX and Commodities

## Today’s Major Economic Events Summary

On October 10, 2025, significant economic data influenced market sentiment. The Swiss SECO Consumer Climate index reported at -37, slightly better than the forecast of -38, indicating a marginally more optimistic outlook for Swiss consumers. In Canada, the employment change for September surged to 60.4K, far exceeding expectations of 2.8K, while the unemployment rate improved to 7.1%, better than the anticipated 7.2%. These positive indicators bolstered the Canadian dollar (CAD), reflecting strength in the labor market.

In the U.S., Michigan Consumer Sentiment rose to 55.0, surpassing the forecast of 54.1, although consumer expectations fell short at 51.2 against a forecast of 51.7. Inflation expectations remained stable at 4.6% for one year and 3.7% for five years.