Technology shares led the sell-off, with an index of semiconductor stocks dropping 3.7%, while U.S.-listed Chinese firms also slumped. Alibaba Group Holding fell nearly 7%, and JD.com Inc slid 5.6%.
Trump said on Truth Social that there was “no reason” to meet Chinese President Xi Jinping in South Korea later this month, adding that the U.S. was “calculating a massive increase” in duties on Chinese goods. The announcement rattled markets that had been hitting record highs earlier in the week.
“He’s caught the market off guard again and thrown more question marks into a market already being scrutinized for over-enthusiasm,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
The Dow Jones Industrial Average fell 461.84 points, or 1.00%, to 45,896.58; the S&P 500 lost 97.67 points, or 1.45%, to 6,637.44; and the Nasdaq Composite declined 466.51 points, or 2.03%, to 22,558.12.
“With equities at high valuations, this sell-off is a sign of nerves. Everything is priced for perfection, so any uncertainty shakes the market,” said Gene Goldman, chief investment officer at Cetera Investment Management in El Segundo, California.
Global Reaction and Bond Market Moves
The sell-off rippled through global markets. MSCI’s world equity index fell 1.27% to 980.84, while European shares erased their weekly gains in a late-session slide, with the STOXX 600 closing 1.25% lower — its sharpest intraday fall in over a month.
In the bond market, U.S. Treasury yields extended earlier declines after Trump’s remarks, with the 10-year yield dropping to its lowest level since mid-September. The yield on the benchmark note fell 7.9 basis points to 4.069%, down from 4.148% the previous day.
The move came as U.S. government operations remained partly shut since October 1, delaying the release of key economic data and leaving investors without fresh indicators on growth and inflation.
Currency Market Reactions
The U.S. dollar weakened broadly, with the dollar index falling 0.41% to 98.98. The euro gained 0.41% to $1.161, while the yen strengthened 0.71%, pushing the dollar down to ¥151.98.
The yen, however, remained under pressure for the week amid uncertainty over Japan’s interest rate outlook following fiscal conservative Sanae Takaichi’s unexpected victory to lead the ruling party — a move seen as reducing the likelihood of another Bank of Japan rate hike this year.
Japanese Finance Minister Katsunobu Kato said the government was “concerned about excessive volatility” in the foreign exchange market.
Political Tensions in Europe
In France, political instability added to investor caution as President Emmanuel Macron convened mainstream political leaders for a crisis meeting at the Elysée Palace ahead of a self-imposed Friday deadline to appoint a new prime minister.
French blue-chip stocks fell 2% for the week, after markets were rattled on Monday when Sebastien Lecornu resigned — along with his government — just hours after unveiling his cabinet lineup..