Wall Street drops from record highs after Trump warns ‘massive’ tariffs on China

The market’s unstoppable rally hit a wall on Oct. 10 as President Donald Trump’s renewed tariff threats against China triggered a broad sell-off across risk assets.

Trump accused Beijing of “hostile behavior,” alleging China was preparing to impose export controls on rare earth materials.

“I was to meet President Xi in two weeks at APEC in South Korea,” he wrote on social media, “but now there seems to be no reason to do so.” He warned that the U.S. would “financially counter” the move and is considering a “massive increase of tariffs” on Chinese imports.

The remarks caught markets by surprise, reversing optimism that had pushed stocks to record highs earlier in the week.

The S&P 500 and Nasdaq 100 both posted their sharpest one-day losses since April, while the VIX volatility index — Wall Street’s fear gauge — spiked nearly 25%.

In the stock market’s AI corner, the Magnificent Seven — which includes Nvidia, Microsoft, Apple, Alphabet, Meta, Amazon and Tesla — wiped out $500 billion in a session, with their combined market capitalization dropping to $20.5 trillion.

But this week’s real showstopper was Advanced Micro Devices. After announcing a partnership with OpenAI, AMD shares rocketed 35% on the week — the best since 2016. Ironically, Nvidia also unveiled a similar collaboration with OpenAI back in September — prompting some analysts to question whether these overlapping deals are creating circular revenue streams that could eventually come under scrutiny.

Precious metals continued to march higher. Gold broke above $4,000 an ounce, while silver hit $51 — an all-time high and its first return to these levels since 2011.

Gold is now up 52% year-to-date, marking its best performance since 1979, while silver has surged an eye-popping 73%, climbing in each of the past eight weeks. Some traders are warning that a looming shortage of physical silver in London’s vaults could drive prices even higher.

More: Fed interest rate cut finally comes and Wall Street swoons

Ford and General Motors both slid around 5%, weighed down by operational setbacks that contrast sharply with the exuberance on Wall Street.

Ford is pausing production next week at its Dearborn, Michigan, plant, where the F-150 Lightning electric pickup is made, following a supplier fire in New York. The company also scrapped plans that would have allowed dealers to offer a $7,500 EV lease tax credit after the federal subsidy expired on Sept. 30. GM scrapped their plan to do the same a day earlier.

Benzinga is a financial news and data company headquartered in Detroit.

This article originally appeared on Detroit Free Press: Wall Street’s rally that defied gravity hits a big speed bump