Sat Oct 11 06:30:00 UTC 2025: ## Stocks Plunge After Trump Threatens China Trade War Escalation

**New York, NY** – U.S. stocks suffered a dramatic sell-off on Friday after President Donald Trump threatened to escalate the trade war with China, accusing the country of “hostility” regarding rare earth metal exports. The Dow Jones Industrial Average plummeted 878.82 points, or 1.9%, to close at 45,479.60, while the S&P 500 fell 2.71% to 6,552.51, its largest drop since April 10. The Nasdaq Composite took the biggest hit, tumbling 3.56% to 22,204.43.

The downturn reversed earlier gains, with the Nasdaq briefly hitting an all-time intraday high before Trump’s comments. In a post on Truth Social, Trump stated he was considering a “massive increase of tariffs on Chinese products” and suggested he would cancel a planned meeting with President Xi Jinping.

The President accused China of holding the globe hostage by controlling rare earth metal resources, critical components in tech and defense industries. This follows China’s recent move to tighten export controls on these metals.

“Expectations for a China trade deal just got swept off the table,” said Jeff Kilburg, founder of KKM Financial, citing profit-taking as a driver of the sell-off.

Tech stocks, particularly those with heavy exposure to China, were hit hardest. Nvidia, AMD, and Tesla saw significant declines. Oil prices also fell amid concerns that higher tariffs would dampen global demand.

The CBOE Volatility Index (VIX), a measure of market fear, spiked, signaling investors were seeking protection against further losses.

Adding to the negative sentiment was the ongoing U.S. government shutdown, now in its tenth day, with layoffs of federal workers beginning.

While most sectors suffered losses, some shifted to safer consumer staples. Some stocks tied to rare earth minerals jumped as a result.

Despite Friday’s losses, analysts at UBS remain optimistic about the bull market, pointing to the strong recovery since 2022. Also, JPMorgan upgraded NetEase, the gaming company. However, other analysts cautioned that the escalating trade tensions could persist. Levi Strauss shares tumbled as investors took profit post-earnings, but Bank of America isn’t losing the faith. Bridgewater Associates founder Ray Dalio cautioned that U.S. government debt is expanding at an unsustainable pace, drawing parallels to the period leading up to World War II.

The Labor Department is bringing back workers for the Consumer Price Index despite the ongoing federal government shutdown, a White House official told CNBC.

Also, Protagonist Therapeutics stock spiked 33% after The Wall Street Journal reported that Johnson & Johnson was in talks to buy the biopharmaceutical company.

Read More