Stock Market Update

[BRIEFING.COM] The S&P 500 (-1.8%), Nasdaq Composite (-2.6%), and DJIA (-1.2%) saw their modest early gains wiped away after President Trump stated on Truth Social that China is "becoming very hostile" in regard to the dispute over rare earth metals and is now considering a massive tariff increase on Chinese products.

The president also noted that there no longer seems to be reason to meet with President Xi at the APEC summit in South Korea two weeks from now. 

While The Wall Street Journal had a report out before the open that said the president is considering responses to China's recent rare earth mineral restrictions, the major averages moved higher this morning as investors looked to capitalize on yesterday's dip. 

The ensuing retreat after President Trump's post around 11:00 a.m. ET was just as broad-based as this morning's advance but resulted in significantly wider losses. 

Nine S&P 500 sectors now trade in negative territory, with the information technology (-2.4%), consumer discretionary (-2.3%), and energy (-1.8%) sectors holding the widest losses. 

Mega-cap names have paced the retreat, with the Vanguard Mega Cap Growth ETF down 2.2% after a healthy early gain. 

Chipmakers are also under heavy pressure, as the PHLX Semiconductor Index faces a 4.4% loss, moving it into negative territory for the week. Additionally, Bloomberg reported that the Senate passed legislation limiting exports of AI chips to China.

The price of oil, which was under pressure before President Trump's remarks, has also seen a significant decrease of $2.52 to $58.99 per barrel, a decrease of 4.1%. 

Meanwhile, the defensive consumer staples (+0.6%) and utilities (+0.2%) sectors hold modest gains as investors look for more defensive positions.

U.S. Treasuries have benefitted from the risk-off sentiment, as the 10-year note yield has moved lower by nine basis points to 4.06%. 

After several uneventful sessions this week, the market finally ran into a consequential macro development, disrupting the cycle of buy-the-modest-dip to fresh record highs. Today's pullback has echoed through nearly every pocket of the market, with decliners outpacing advancers by a roughly 4-to-1 margin on the NYSE and a greater than 3-to-1 clip on the Nasdaq, sending the major averages into negative territory for the week. 

Reviewing today's data:

• October Univ. of Michigan Consumer Sentiment - Prelim 55.0 (Briefing.com consensus 54.5); Prior 55.1
  • The key takeaway from the report is that consumers are not expecting any meaningful improvement in prices or job prospects, a view that could potentially crimp their discretionary spending activity.