Stocks experienced significant declines on Friday, with the S&P 500 and Nasdaq marking their largest one-day percentage drops since April 10. This decline was accompanied by a decrease 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 market closed on Friday, Trump announced an increase in tariffs on Chinese exports to the U.S. to 100% and the implementation of export controls on critical software in response to China’s restrictions on rare earth minerals crucial to technology and manufacturing. Prior to this, Trump had hinted at imposing new levies on Chinese goods and threatened to cancel a meeting with President Xi Jinping.
The news rattled markets and raised worries about the impact of the trade dispute on the U.S. economy. Trump’s tariff announcement on April 2 had already triggered significant market volatility. Technology-related stocks led the market decline, with the S&P 500 technology index falling by four percent and the semiconductor index dropping by 6.3%. U.S.-listed Chinese companies also saw declines, with Alibaba Group Holding falling by 8.4% and JD.com Inc. by 6.2%.
Trade concerns also affected oil prices, which dropped over $2 a barrel, impacting demand projections. Conversely, spot gold prices surged past the $4,000 per ounce milestone amid market uncertainty.
Market analysts expressed surprise at Trump’s actions, noting that they introduced uncertainty into a market already under scrutiny for potential overvaluation. By the market close, the Dow Jones Industrial Average was down 878.82 points, the S&P 500 had fallen by 182.60 points, and the Nasdaq Composite dropped by 820.20 points.
Earlier in the week, U.S. stock indexes had reached record highs, driven partly by expectations of Federal Reserve interest rate cuts and optimism surrounding AI-related deals. However, all three major U.S. stock indexes ended the week in the red, with the S&P 500 posting its largest weekly decline since May.
Global stocks, as measured by MSCI, also saw a decline, falling by 2.11%. European shares closed 1.25% lower, erasing gains made earlier in the week due to Trump’s comments. Additionally, U.S. Treasury yields hit multi-week lows as investors sought safe-haven assets in response to the market uncertainty.
The U.S. dollar weakened after Trump’s remarks, leading to a rise in the euro and yen against the greenback. Meanwhile, currencies tied to commodities, like the Australian dollar, saw declines. The yen and euro both strengthened against the dollar, with concerns about Japan’s interest rate policy and fiscal uncertainties impacting these movements.
In France, President Macron reappointed Sebastien Lecornu as prime minister after his recent resignation, which had initially caused market disruptions. French blue-chip stocks also experienced a two percent decline during the week.
Oil prices dropped, with U.S. crude settling at $58.90 and Brent at $62.73. Meanwhile, spot gold prices rose to $4,008.74 per ounce.
