TheDrop Market Analysis, 10/16/25

Markets took a major slump on Thursday as investors await key jobs reports and the Federal Reserve's October move in regard to inflation rates, and the escalation of the trade war between the United States and China.

Chair of the U.S. Federal Reserve Bank Jerome Powell, Bloomberg.

Many stocks today initially surged but abruptly sank midday. This was especially seen by the Magnificent Seven and the Nasdaq Composite, with the latter falling 0.5% despite making gains earlier in the day. This was despite Nvidia's 1.1% rise, and the ascent of Taiwan Semiconductors (TSMC) after its strong Q3 earnings report release. Similarly so but with no beginning rise, the Dow Jones Industrial Average fell 0.6% and the S&P 500 fell 0.6%. Over the course of the day, the VIX volatility index surged to as high as 22.63%, as the afternoon selloff became a signal of volatility across markets.

European stocks, meanwhile, had a much stronger day as concerns remain, but the President of the Eurogroup Paschal Donohoe gave hopes that the EU remains resilient despite international pressures like tariffs; in addition, EU leaders have acknowledged the importance of competing with American and Chinese tech innovators. This was why the British FTSE rose meagerly while European Union members like the French CAC 40 and the German DAX P (Global Index) rose by much higher levels. Asian stocks, meanwhile, experienced quite the opposite results with many member indexes like the Japanese Nikkei sinking as the Pacific trade conflict ensued.

For yet another day, cryptocurrencies sank in valuation while gold and silver strengthened as demand for precious metals rises, supply of them is under risk by Chinese trade restrictions, and the Federal Reserve's potential rate cut decision soon, leading to a loss in value of the U.S. dollar. Investors have been retreating funds over to commodities to avoid losses on the heavily overvalued Dollar.

The U.S.-China trade war proved to have escalated after Trump stated today to a reporter that "Well, you're in one [a long-lasting trade war] now," and was later affirmed by the Secretary of the Treasury Scott Bessent.