By Chibuike Oguh
NEW YORK (Reuters) -Investor concerns about the sustainability of Wall Street’s stock market surge intensified on Friday as tariffs resurfaced as a potential risk factor.
U.S. equity markets, which had previously reached record levels earlier in the week, reversed course during the trading day after President Donald Trump reignited fears of escalating tariffs against China. Concerns arose that a retaliatory trade conflict between the two largest economies could signal the end of a remarkable run for U.S. stocks.
Trump, who is scheduled to meet with Chinese President Xi Jinping in approximately three weeks in South Korea, expressed doubt about the need for the meeting and took to social media to criticize China’s recent measures to tighten its rare earth export controls, which he claimed could jeopardize the global economy.
Late on Friday, following the close of Wall Street’s official trading hours, Trump announced plans for a 100% tariff on Chinese imports effective November 1, alongside export restrictions on key American software. While Trump stated he had not canceled the meeting with Xi, his renewed tariff threats caused significant declines in market-leading shares.
Nvidia, Tesla, Amazon.com, and Advanced Micro Devices all experienced declines of over 2% after market closure.
TARIFF ANXIETY DRAGS DOWN MARKET
During regular trading hours, Wall Street stocks had already seen considerable losses. The Dow Jones Industrial Average finished down 1.90%, the S&P 500 dropped by 2.71%, and the Nasdaq Composite suffered a 3.56% decline for the day.
The S&P 500 and Nasdaq recorded their steepest percentage losses in a single day since April 10.
This downturn raises alarms regarding the potential for a significant correction, especially as high stock valuations, driven by enthusiasm for artificial intelligence, may lead to considerable market retraction.
After reaching record highs on Thursday, the S&P 500 and Nasdaq have risen approximately 11% and 15%, respectively, in 2025. Meanwhile, the Dow is up about 7% year-to-date. This increase in valuations has sparked comparisons to the dot-com bubble of the late 1990s.
In a BBC interview on Wednesday, JPMorgan Chase CEO Jamie Dimon cautioned about the increased likelihood of a significant correction on Wall Street within the next six months to two years.
“The current high valuations of equities signal nervousness in the market,” remarked Gene Goldman, chief investment officer at Cetera Investment Management. “With everything priced for ultimate success, any uncertainty increases market anxiety. This environment creates additional doubts about economic growth.”
Trump’s previous announcement of what he termed Liberation Day tariffs had shocked the markets, prompting investors to react quickly and resulting in a collective loss of $2.4 trillion in market value for S&P 500 companies.
