TheDrop Market Analysis, 10/10/25

Markets took a very sharp turn downward as President Trump announced a 100% tariff on Chinese goods, an accumulation of gradually escalating trade tensions between the two countries in recent months, and the first Trump administration.

A Chinese flag portrayed left of a cargo ship, shutterstock.

The S&P 500 index fell 2.71%, the Dow Jones Industrial Average sank 1.9%, the Nasdaq Composite plummeted by 3.56%, and the Russell 2000 fell 3.01%. Many of these stocks performed strongly in the morning, however by the afternoon when President Trump announced steep tariffs on the People's Republic of China, stocks sank significantly, reversing many of their gains from earlier this week. This was shown by the movement of the VIX volatility index, which remained close to flat in the morning but made a sudden surge midday as stocks plummeted cohesively.

Not only American stocks but global stocks fell as well. Due to the trade tensions between the United States and China, the two largest economic hegemons in the world, other areas of the world could be significantly affected by the crossfire. In Europe, the British FTSE 100 ETF fell 0.86%, the French CAC 40 fell 1.53% (also contributed by Emmanuel Macron's appointment of the sitting PM as political tensions there surge), and the German DAX P fell 1.5%. In Asia, the Japanese Nikkei fell 1.01% and the Hong Kong Hang Seng fell 1.73%.

Bond markets and crypto performed similarly poor, with the 10-Yr Bond rate collapsing 2.34%, and with Bitcoin falling 6.52%, Ethereum by nearly 12%, and XRP 16.7%. The mere speck of green in this quite bearish market has been gold and silver, rising 1.58% and 0.76%, respectively, as more investors leave the U.S. Dollar and crypto in favor of the more stable precious metals.

Midday, President Trump announced that he would implement a new 100% tariff increase on all Chinese imports effective November 1st, 2025. The catalyst for this move has been China's recent restrictions on the export of rare earth metals, many of which are used in the manufacturing of electronics, EVs, and defense systems here in the United States and the West. Trump also threatened to abandon his planned meeting with Chinese leader Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) forum in South Korea.

The Magnificent Seven started strong but contributed to some of the deepest losses realized in the market today, with Nvidia falling 4.85%, which just yesterday made all-time highs. Additionally, Tesla fell 5.06%, as it relies on many imported rare earth goods from China. Even Palantir, a non-member of the Mag. 7 but still a formidable tech powerhouse, fell 5.4%.