Shocking Trade War Jitters Roil US Markets, 5 Ways China Tensions Shake Wall Street

Trade War Jitters Roil US Markets: As trade tensions between Washington and Beijing remained simmering, US indices fluctuated between gains and losses on Tuesday and ended the day neutral on Wall Street. Strong gains in the basic resources sector helped Canada’s flagship S&P/TSX stock index soar, ending more than 500 points higher at 30,353.61.

After fluctuating between a sharp morning loss and a rebound in the afternoon, the S&P 500 finished 0.2% down in the United States. Following comparable oscillations, the Nasdaq composite fell 0.8%, while the Dow Jones Industrial Average gained 0.4%. The actions represent yet another round of dramatic market turns in recent days.

Wall Street had its best day since May on Monday after plunging on Friday for the worst day since April. The fluctuations were brought on by changing U.S.-China trade attitudes.

The most recent move comes after China’s Commerce Ministry banned Chinese businesses from doing business with five subsidiaries of South Korean shipbuilder Hanwha Ocean, a jab at President Donald Trump’s attempts to revive the sector in the United States. Asian markets declined as European markets were erratic.

The S&P 500 dropped 10.41 points to 6,644.31 overall. The Nasdaq fell 172.91 points to 22,521.70, while the Dow Jones Industrial Average increased 202.88 points to 46,270.46.

Trade War Jitters Roil US Markets: Tech Stocks Take the Hardest Hit

The largest weights on the market were technology equities, which are especially vulnerable to trade disputes with China. China is the source of raw materials and production for major chipmakers and other businesses. Growing sales also depends on China’s sizable customer base. Broadcom lost 3.5%, while chipmaker Nvidia fell 2.6%.

An unanticipated burden on the market has been the continuing trade war between the United States and the rest of the globe. Given that the United States and China are the two biggest economies in the world, their trade dispute has the potential to have the greatest economic impact.

With both Washington and Beijing imposing additional port fees on each other’s boats, international shipping and shipbuilding have emerged as a key point of contention. Those charges become operative on Tuesday.

Ulrike Hoffmann-Burchardi, global head of equities and chief investment officer for the Americas at UBS Global Wealth Management, said, “Given the substantial economic stakes, we remain cautiously optimistic that both sides will ultimately pursue a negotiated resolution.”

The constantly changing U.S. tariff policies have not yet had a significant effect on the U.S. economy. If countries resume a cycle of retaliatory tariffs and businesses pass on more of the increased costs to customers, that may alter.

The regular economic reports on inflation, consumer spending, and employment have been suspended due to the U.S. government shutdown. Economists and investors have found it more difficult to continue assessing the economic effects of tariffs as a result. To get a better understanding of the overall state of the economy, Wall Street is examining the most recent batch of business profits and projections.

In light of complaints that the market has become too costly due to price increases that have outpaced business earnings, Wall Street will also use upcoming profit reports to assess the worth of the market as a whole. Either prices must drop or company earnings must increase for equities to seem less costly overall.

The most recent set of earnings reports was released by banks first, and the findings suggest that Wall Street may be in for one of its most lucrative quarters ever. Major bank executives, meanwhile, voiced varying degrees of prudence over the economy and markets. Citigroup increased 3.9%, and Wells Fargo increased 7.1%, while JPMorgan Chase fell 1.9%.

Other businesses that had some of the largest growth were merchants and industrial industries. Walmart increased 5%, while Caterpillar increased 4.5%.

As investors worried about Beyond Meat’s intentions to reduce its debt by issuing new shares, the company’s stock dropped 24.6% and sank below $1.

The Federal Reserve has also been deprived of a large portion of the data it needs to make policy choices due to a lack of updates about the U.S. economy. Amid concerns that unemployment would increase, the central bank lowered its benchmark interest rate by a quarter of a percentage point in September. This was the Fed’s first reduction of the year, and Wall Street anticipates further cuts at its October and December meetings.

The central bank finds it more challenging to fulfill its responsibilities of maintaining stable prices and supporting robust employment when there are gaps in employment and inflation statistics. Fed Chair Jerome Powell once again hinted on Tuesday that the Fed is a little more concerned about the labor situation.

At a National Association of Business Economics convention in Philadelphia, he said, “Our assessment of the balance of risks has changed due to rising downside risks to employment.”

Treasury yields remained mostly unchanged. Late Friday, the yield on the 10-year Treasury fell from 4.05% to 4.03%. On Monday, the U.S. bond market was closed for a holiday.

Gold is still over $4,100 an ounce, up 0.7%. The economy and tariffs are only two of the many unknowns that have caused the price of the precious metal to surge 57% in 2025.