President Trump accuses China of monopolizing rare earths, threatens retaliation
President Donald Trump has criticized China’s rare earth export restrictions and threatened retaliatory tariffs.
US stocks fell on October 10 after President Donald Trump threatened “massive increases in tariffs on Chinese goods” and indicated he might skip a planning meeting with Chinese President Xi Jinping in the coming weeks.
The S&P 500 Composite Index fell 182.60 points, or 2.7%, to close at 6,552.51, and the Dow Jones Industrial Average fell 878.82 points, or 1.9%, to close at 45,479.60. The tech-heavy Nasdaq Composite Index fell nearly 4%, or 820.20 points, to close at 22,204.43.
Financial markets have largely ignored the ongoing government shutdown, which entered its 10th day on Friday, October 10, but reacted sharply to President Trump’s comments posted on the online network Truth Social.
“China is truly our largest trading partner and someone that investors want to continue working with, but I think we just need each other,” said Jack Ablin, chief investment strategist at Kusett Asset Management.
However, another reason for the stock price drop could be that the stock has repeatedly closed at record highs in recent days. “Certainly with the excitement around AI, when you measure that against valuations, everything needs to go well for stocks to continue to rise,” Ablin told USA TODAY. “I don’t think the stock market rally is a timing issue, but I do think it’s a headwind.”
Investors may be taking the government shutdown in stride, but there are signs that some of Washington’s policies are starting to weigh on U.S. consumers. A high-profile University of Michigan survey of consumer sentiment released this morning found little movement overall, but an alarming decline in one subcomponent.
“The Expectations Index, which is typically a better gauge of consumer spending momentum historically, fell from 51.7 to 51.2, its lowest level since May,” Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, said in a research note.
“The headwinds facing households from weak labor markets and the drag on real income growth from tariff-induced price increases suggest that the 3% spending growth currently expected for the entire third quarter is unsustainable,” Allen added.
One silver lining to the market turmoil may be lower borrowing costs. U.S. Treasury yields fell on Oct. 10, with the 10-year Treasury yield dropping about 8 basis points to 4.069%. Kim extended his winning streak. Just days after closing above $4,000 an ounce for the first time, the precious metal posted a gain of about 1.5%.
(This story has been updated to add information.)
