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Trump's tariff threats against China trigger market

concerns

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S&P 500 and Nasdaq post largest drops since April 10

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AI enthusiasm still seen by some as market's main driver

By Chibuike Oguh

NEW YORK, Oct 10 (Reuters) - Investor worries that Wall

Street's record stock rally would soon fizzle loomed large after

tariffs re-emerged as a market risk.

U.S. equity markets, fresh off midweek record highs,

performed an about-face on Friday after President Donald Trump

revived threats to hike tariffs against China, triggering

worries that a possible tit-for-tat trade drama between the

world's two biggest economies could mark the end of a

record-breaking rise in U.S. equities.

Trump, who was due to meet Chinese President Xi Jinping in about

three weeks in South Korea, canceled the meeting and complained

on social media about what he called China's plans to hold the

global economy hostage after it dramatically expanded its rare

earths export controls on Thursday.

TARIFF TALK DRIVES DOWN MARKET

Wall Street stocks fell sharply following Trump's comments.

The Dow Jones Industrial Average fell 1.90%, the S&P 500

lost 2.71%, and the Nasdaq Composite lost 3.56%.

The selloff raises concerns that high stock market

valuations propelled by enthusiasm over artificial intelligence

might lead to a significant downturn.

The S&P 500 and the Nasdaq hit fresh record highs on Thursday

and are up about 11% and 15%, respectively, in 2025. The Dow has

gained about 7% year-to-date, all of which has rekindled

memories of the late 1990s dotcom bubble that burst in 2000.

JPMorgan Chase CEO Jamie Dimon, in a BBC interview on

Wednesday, warned of a heightened risk of a significant Wall

Street correction within the next six months to two years.

"With equities at high valuations, this selloff is a sign of

jitters," said Gene Goldman, chief investment officer at Cetera

Investment Management. "Everything is priced for perfection, so

the uncertainty increases market jitters. All of this adds

uncertainty to economic growth."

In April, Trump's announcement of what he called Liberation

Day tariffs stunned markets and sent investors scrambling,

causing S&P 500 companies to shed a combined $2.4 trillion in

market value.

But some investors say the latest U.S.-China trade tensions

are unlikely to significantly change the market trajectory, with

AI remaining the driving factor.

"This is definitely a significant issue, and it could

warrant a pullback but I don't necessarily see it derailing the

AI thing that's been driving the market," said James St. Aubin,

chief investment officer at Ocean Park Asset Management.