The Dow Jones Industrial Average dropped 1.05% to 45,873, the S&P 500 fell 0.8%, while the Nasdaq Composite, heavy in tech stocks, slid nearly 2%, leading the declines.
Trump’s announcement came after China imposed export controls on rare earth minerals vital to the tech and defense industries, coupled with new port fees on American ships and an antitrust probe into Qualcomm. Trump canceled a planned meeting with Chinese President Xi Jinping at the upcoming APEC summit and warned these measures would be met with strong US counteractions, including steep tariff hikes.
Shares of US rare earth mineral companies soared Friday, led by MP Materials and USA Rare Earth, both up around 15%, as markets priced in supply chain disruptions. Meanwhile, technology firms sensitive to trade friction saw sharp losses: AMD fell 7%, Nvidia and Broadcom each lost 2%, and Tesla dropped 2%.
Markets reacted to multiple factors, including trade tensions, corporate earnings, AI hype, and rising bond yields. Traders and long-term investors alike are trying to make sense of what this means for the economy and their portfolios.
The sudden drop caught many retail investors by surprise. Many had expected steady gains after weeks of positive market sentiment. The sharp decline prompted a wave of selling across multiple sectors. Technology stocks led the losses, as investors reassessed high-growth companies in light of rising interest rates and potential overvaluation. Semiconductor and AI-related companies were particularly affected. Financial stocks also pulled back. Rising bond yields have made lending less profitable for banks, creating caution among investors. Some financial firms saw their stock prices fall despite posting strong quarterly results.
Consumer-focused companies experienced mixed reactions. Retail and consumer goods companies saw selling pressure due to fears that tariffs and rising costs could impact earnings in the coming months.
Energy and industrial sectors were not immune. Market participants noted that global economic uncertainties, including trade disruptions and geopolitical risks, were influencing industrial demand and energy prices.
Investor sentiment remains fragile amid the ongoing US government shutdown, now in its 10th day, which has delayed key government economic reports. Private data from the University of Michigan showed October consumer sentiment steady but low at 55, indicating persistent worries about inflation and job security.
Looking ahead, earnings season kicks off next week with major banks JPMorgan and Citigroup expected to report, with analysts anticipating softer revenue due to tariffs.
US stocks tumbled sharply on Friday, October 10, 2025. Investors reacted to escalating tensions between the US and China.
- Dow Jones Industrial Average (DJIA): 45,873.63, down 484.79 points (-1.05%)
- S&P 500: dropped 0.8%
- Nasdaq Composite: fell 1.7%, led by tech stocks
Top losers:
- AMD: -7%
- Nvidia: -2%
- Tesla: -2%
Chinese stocks traded in the US also fell:
- Alibaba (BABA): -5%
- Baidu (BIDU): -5%
- JD.com (JD): -4.7%
- PDD Holdings (PDD): -3.7%
Investors turned to rare earth stocks as China’s export restrictions created supply concerns. MP Materials surged 11% to $80.29, and USA Rare Earth gained 15%. These minerals are critical for electronics, electric vehicles, and defense technologies. All major indices are set for weekly losses, with the S&P 500 on track to drop approximately 1%.
Market participants now look ahead to earnings season, with JPMorgan and Citigroup scheduled to release results next week. Analysts anticipate that tariffs and trade uncertainties may weigh on revenue and corporate performance.
Why did trade tensions with China cause a market drop?
Trade issues have always made investors nervous, and recent news about potential new tariffs on Chinese goods shook the market. Traders fear that higher tariffs could slow down U.S. economic growth.
A “massive increase” in tariffs was suggested, sparking worries about a prolonged trade war. This is not the first time tariffs have affected the markets. Previous announcements involving countries like Canada and Mexico also created uncertainty.
He canceled a planned meeting with President Xi Jinping at the APEC summit.
China recently:
- Added port fees on American ships
- Launched an antitrust investigation into Qualcomm (QCOM)
- Tightened rare earth export controls
- Halted US soybean purchases
Investors are concerned that tariffs could push up prices for consumers and businesses. If costs rise, companies may earn less, and stock prices can fall. Traders reacted quickly, selling shares and pushing major indexes lower.
The effect on global trade is also being watched. Companies that rely on exports or imports could face challenges, and this uncertainty is why the market experienced such a sudden drop.
How did corporate earnings impact stock prices today?
Corporate earnings reports played a major role in the market decline. Several big companies posted results that did not meet investor expectations, even if the earnings looked strong on paper.
For example, some companies showed growth, but their stock prices still fell sharply. Investors had anticipated even higher profits, and when reality did not match expectations, selling pressure increased.
Earnings reports are more than just numbers. They signal a company’s health and future prospects. When results disappoint, confidence dips, and stock prices often follow.
Even sectors that had been performing well recently were affected. This widespread reaction indicates that investors are cautious and sensitive to any hint of weakness in company performance.
Why stocks are down today
Stocks are down today as U.S. markets react to multiple economic and geopolitical factors. The Dow Jones, S&P 500, and Nasdaq all fell sharply, reflecting investor caution. Trade tensions between the U.S. and China escalated after President Trump warned of “massive” new tariffs on Chinese goods. Investors fear this could slow global trade, raise costs for companies, and weigh on corporate profits.
Weak corporate earnings also contributed to the decline. Some major companies posted results that fell short of high market expectations, prompting investors to sell shares. Technology stocks, which had driven gains earlier in the year, were hit particularly hard.
Rising bond yields added further pressure, making fixed-income investments more attractive than equities. Concerns over inflated stock valuations, especially in AI and tech sectors, fueled the sell-off. Overall, the market drop reflects uncertainty and caution as investors weigh economic growth, trade policies, and potential risks ahead.
Economic Sentiment Amid Shutdown
The US government shutdown, now in its 10th day, has delayed key economic data.
- University of Michigan Consumer Sentiment Index: 55.0 (slightly below September’s 55.1)
- Year-ahead inflation expectations: 4.6% (down from 4.7%)
- Five-year inflation forecast: steady at 3.7%
“High prices and weakening job prospects remain at the forefront of consumers’ minds,” said Joanne Hsu, Director of UMich consumer surveys.
Is the AI boom causing market worries?
Artificial intelligence has been a hot topic in the stock market this year. Many investors poured money into AI-related companies, hoping for rapid growth and high returns.
But rapid growth has raised concerns about overvaluation. Experts warn that the excitement around AI might be inflating stock prices beyond reasonable levels. If investors start to doubt the long-term profits of AI companies, the market could correct quickly.
Warnings about a potential AI-driven crash added to the selling pressure today. Investors began reassessing the risks of putting too much money into one sector.
While AI remains promising, the sudden hype can make the market volatile. Today’s decline shows that even popular trends cannot fully protect stocks from market realities.
What role did rising bond yields play in today’s decline?
Another key factor behind the market drop is rising bond yields. When yields increase, borrowing costs for companies go up, and safe investments like government bonds become more attractive.
The 10-year Treasury yield recently spiked to levels not seen in over a year. This caught many investors off guard and triggered a sell-off in stocks.
Higher yields make stocks less appealing because fixed-income investments can now offer better returns with lower risk. Investors often rebalance their portfolios in such conditions, selling shares and buying bonds.
This movement can create a domino effect. As more investors sell stocks, prices drop further, which can accelerate a market decline.
How are global tensions affecting U.S. markets?
Global political and economic uncertainties are also impacting U.S. stocks. Investors worry about conflicts, fiscal spending, and other geopolitical issues.
Executives and financial experts have suggested that these uncertainties could trigger a market correction. When governments spend heavily or engage in military actions, it can affect global trade, inflation, and investor confidence.
Even companies that are performing well domestically are not immune. Global events can disrupt supply chains, increase costs, or reduce demand.
The combination of trade tensions, AI concerns, rising yields, and geopolitical risks created a perfect storm today, leading to the sharp drop in stock prices.
Here are the top losers from the major US stock indices on October 10, 2025:
S&P 500 Top Losers
| Stock | % Drop |
| AMD | -5.73% |
| Micron Technology (MU) | -5.77% |
| Synopsys (SNPS) | -5.97% |
| Zebra Technologies (ZBRA) | -4.78% |
| Qualcomm (QCOM) | -4.51% |
Nasdaq Top Losers
| Stock | % Drop |
| AMD | -5.73% |
| Micron Technology (MU) | -5.77% |
| Synopsys (SNPS) | -5.97% |
| NetApp (NTAP) | -5.67% |
| Lam Research (LRCX) | -4.53% |
Dow Jones Top Losers
| Stock | % Drop |
| Microsoft (MSFT) | -1.26% |
| Boeing (BA) | -1.67% |
| Goldman Sachs (GS) | -1.81% |
| IBM | -1.97% |
| Apple (AAPL) | -2.18% |
Tech stocks like AMD, Micron, and Synopsys led the declines, each tumbling more than 5%. Dow components Apple and Boeing also recorded notable losses, though smaller in comparison
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