The stock market faced a sharp decline last Friday after President Trump threatened to impose “massive tariffs” on China due to tighter restrictions on rare-earth exports. Following the announcement of an additional 100% tariff on Chinese goods, markets initially plummeted but later stabilized as news broke that Trump might still meet with Chinese President Xi Jinping later this month.
The major indexes experienced notable weekly losses, with the Dow Jones Industrial Average dropping below its crucial 50-day moving average. Key players in the upcoming earnings reports include Taiwan Semiconductor, JPMorgan Chase, Goldman Sachs, and Oracle, which is hosting an AI World conference this week.
Stocks linked to AI and China took significant hits, including Taiwan Semiconductor and Alibaba. Some stocks like Oracle managed to withstand the sell-off relatively well, while Tesla faced a downturn but remains a focal point for potential recovery.
Investors likely missed opportunities to reduce their exposure, preparing for further volatility ahead.
### Market Overview
Futures for the Dow, S&P 500, and Nasdaq 100 will open Sunday evening, and these movements are anticipated to be closely monitored. By late Friday, the Dow ETF decreased by 0.2%, S&P 500 dipped by 0.1%, while Nasdaq futures saw a slight rise. Overall, concerns about the tariffs contributed to a nearly 1% drop in these futures until Trump’s comments about the potential meeting with Xi injected some optimism.
The week had initially appeared promising, with the S&P 500 and Nasdaq hitting record highs fueled by enthusiasm around AI. However, the impending tariff threats dampened the mood. The Dow lost 2.7% over the week, with the S&P 500 down 2.4% and the Nasdaq 2.5%—much of that loss stemming from a sharp drop of 3.6% on Friday. Small-cap stocks also suffered, with the Russell 2000 index falling by 3.3%.
In addition, the Invesco S&P 500 Equal Weight ETF fell 3.2%, its lowest point in two months. Meanwhile, specific sectors such as energy saw significant declines—U.S. crude oil futures plummeted to a five-month low.
### ETFs and Sector Performance
Among growth ETFs, the Innovator IBD 50 ETF showed a slight increase for the week despite a substantial drop on Friday. Meanwhile, the iShares Expanded Tech-Software Sector ETF saw a decline as major holdings like Oracle struggled. The semiconductor sector was particularly hard-hit, with the VanEck Vectors Semiconductor ETF showing major losses.
Conversely, some rare-earth elements and speculative growth stocks experienced gains, revealing a mixed bag of market reactions.
### Trump’s New Tariff Measures
In a move announced via Truth Social, President Trump declared his intention to impose an additional 100% tariff on Chinese imports beginning November 1. This announcement raised questions about the future of electronic goods, particularly the Apple iPhone, which had previously been shielded from tariffs. Additionally, plans for export controls on critical software were hinted at, signaling a continued aggressive stance toward China’s trade practices.
China’s recent moves to tighten its export restrictions appear to be a direct response to U.S. actions, indicating a potential escalation in trade tensions. While Trump’s style of negotiation shines a light on the volatility in global trade relations, there remains a chance for rapid resolution, especially with high-stakes meetings approaching.
### What Investors Can Do Now
As the market navigates through this turbulent period, the response to potential recovery or further loss becomes crucial. Given the current conditions, investors should consider reassessing their portfolios. Cutting losses and taking profits on gains could be prudent actions.
Keep an eye on any stocks that remained resilient during the sell-off, such as Oracle, which is set to gain attention with its upcoming conference. Upcoming earnings reports from major financial institutions, along with tensions surrounding the U.S. government shutdown, will likely shape the market’s trajectory moving forward.
In conclusion, as the landscape unfolds, it is vital for investors to stay informed and adaptable, particularly in sectors resilient to shocks, while exercising caution amid ongoing geopolitical uncertainties.
