Nasdaq 100 Plunges as Trump’s China Tariff Threat Rattles Markets – VIX Up Sharply

The Nasdaq 100 experienced a significant downturn, dropping 2%, as President Donald Trump's renewed threats of increased tariffs on Chinese goods sent shockwaves through U.S. equity markets, stoking fears of a potential trade war escalation.

The tech-heavy index bore the brunt of the sell-off, reflecting market anxieties over the potential impact. The huge red candle on the 1 hour came alongside the Truth Social post.

Broader market indices also felt the impact. The S&P 500 declined by 1.42%, and the Dow Jones Industrial Average shed 1.19%, underscoring the widespread concern among investors. The market's reaction underscores the sensitivity to trade-related news, particularly involving the two largest global economies.

Trump's announcement, delivered via a Truth Social post, criticized China's trade practices, specifically highlighting concerns over export controls on rare earth elements and other commodities. The President's statements fueled uncertainty, prompting investors to reassess their positions in companies with significant exposure to the Chinese market.

Economic analysts have voiced concerns about the potential ramifications of escalating trade tensions when higher tariffs were on the agenda earlier in the year. UBS strategists cautioned that if the proposed tariffs remain in place, U.S. real GDP could be negatively impacted by 1.5-2 percentage points, while inflation could climb to nearly 5%. These projections highlight the potential for significant economic disruption should the trade dispute intensify.

Investor anxiety has driven a surge in market volatility. The CBOE Market Volatility Index (VIX), a key measure of market fear, has risen by 21%, indicating increased investor caution. This elevated volatility underscores the uncertainty surrounding the trade situation and its potential impact on market stability.