WASHINGTON (dpa-AFX) - Stocks came under pressure in morning trading on Friday and saw further downside as the session progressed, ending the day substantially lower.
The Nasdaq and the S&P 500 pulled back further off Wednesday's record closing highs, plunging to their lowest closing levels in a month.
The major averages ended the day just off their lows of the session. The Nasdaq plummeted 820.20 points or 3.7 percent to 22,204.43, the S&P 500 tumbled 182.60 points or 2.7 percent to 6,552.5 and the Dow slumped 878.82 points or 1.9 percent to 45,479.60.
With the steep drop on the day, the major averages also posted significant losses for the week. The Dow dove by 2.7 percent, while the S&P 500 and the Nasdaq plunged by 2.4 percent and 2.5 percent, respectively.
The sell-off on Wall Street came after President Donald Trump threatened to retaliate against China's expansion of export controls on rare earths.
Trump accused China of 'becoming very hostile' in a post on social media platform Truth Social and threatened a 'massive increase' in tariffs on Chinese products coming into the U.S.
In the post, Trump also said he would no longer meet with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation forum in South Korea, because 'now there seems to be no reason to do so.'
Trump's post raised concerns about an escalation of the trade war between U.S. and China and the potential impact on the global economy.
Traders may have used the early weakness that emerged on Wall Street as an opportunity to cash in some of the recent strength in the markets amid worries about valuations.
In U.S. economic news, a report released by the University of Michigan this morning showed its reading on U.S. consumer sentiment was virtually unchanged in the month of October.
The University of Michigan said its consumer sentiment index edged down to 55.0 in October from 55.1 in September. Economists had expected the index to slip to 54.2.
On the inflation front, the University of Michigan said year-ahead inflation expectations ebbed to 4.6 percent in October from 4.7 percent in September. Long-run inflation expectations held steady at 3.7 percent.
Sector News
Trump's post led to substantial weakness among semiconductor and computer hardware stocks, with the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index plummeting by 6.3 percent and 5.8 percent, respectively.
Oil service stocks also moved sharply lower along with the price of crude oil, dragging the Philadelphia Oil Service Index down by 5.4 percent to its lowest closing level in nearly two months.
Steel, networking, banking and transportation stocks also showed significant moved to the downside, as broad based weakness emerged on Wall Street.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index slumped by 1.0 percent, while Hong Kong's Hang Seng Index plunged by 1.7 percent.
The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slid by 0.9 percent, the German DAX Index and the French CAC 40 Index both tumbled by 1.5 percent.
In the bond market, treasuries surged in reaction to Trump's threats against China. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 9.7 basis points to 4.051 percent, hitting its lowest closing level in well over three weeks.
Looking Ahead
With most major U.S. economic data indefinitely postponed due to the government shutdown, next week's trading may be impacted by reaction to remarks by several Federal Reserve officials, including Fed Chair Jerome Powell.
Reports on consumer and producer price inflation, retail sales and new residential construction had originally been scheduled to be released next week.
The Bureau of Labor Statistics has revealed the report on consumer price inflation that had been due to be released next Wednesday will now be released on Friday, October 24th.
While no other releases will be produced until the resumption of regular government services, the BLS noted the consumer price index data allows the Social Security Administration to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits.
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