U.S. markets ended the last week sharply lower as investors fled risk assets following a late-Friday escalation in trade tensions between Washington and Beijing. President Donald Trump announced plans for an additional 100% tariff on Chinese imports and new export controls on U.S.-made software, citing Beijing’s tightening of rare earth restrictions.
The announcement, made after the closing bell, sent Big Tech shares tumbling — with Nvidia, Tesla, Amazon, and AMD all falling more than 2% in after-hours trading. The Philadelphia Semiconductor Index (SOX) plunged 6.3%, reflecting fears of renewed supply chain disruptions in critical technology and EV components.
During regular trading hours, all three major indexes sold off sharply.
- Dow Jones: −1.90% (−878 pts) to 45,479.60
- S&P 500: −2.71% to 6,552.51 — its steepest daily drop since April
- Nasdaq Composite: −3.56% to 22,204.43 — its worst week since early spring
The CBOE Volatility Index (VIX) surged to its highest close since June, underscoring a “sell first, ask questions later” mentality that gripped Wall Street by the close.
Safe Haven Bid Returns
Treasury yields fell across the curve as investors sought safety. The 10-year yield dropped 9.1 bps to 4.06%, its lowest since mid-September, while the 2-year yield slid 7.5 bps to 3.51%, reflecting renewed expectations of near-term Fed easing. St. Louis Fed President Alberto Musalem said he was “open-minded” to another rate cut, echoing Governor Christopher Waller’s remarks about cautious monetary adjustments amid labor softness.
The 2ys/10ys curve flattened slightly to +52.8 bps, suggesting investors are hedging cyclical risk rather than inflation.
Data Blackout, Earnings Ahead
With the federal government shutdown now in its tenth day, official data releases remain suspended — forcing investors to rely on private indicators such as the University of Michigan consumer sentiment survey, which continued to drift near historic lows amid weakening job prospects.
The market now turns its focus to the start of Q3 earnings season, with JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo set to report next Tuesday. Analysts expect 8.8% YoY EPS growth for the S&P 500, down from 13.8% in Q2, signaling a potential moderation in corporate momentum.
Flow signal perspective
The week closed not with a data signal, but with a political shock that forced portfolio recalibration. Until visibility improves on both policy and data, risk appetite will likely remain capped by geopolitical uncertainty and data darkness.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
