【By Observer Net, Ruan Jiaqi】

“It's really a bolt from the blue (a bolt from the blue)...” Michael Brown, a senior research strategist at Pepperstone Group, lamented to U.S. media.

It all started with Trump. On October 10, the exhausted U.S. president made an emotional threat to restart the tariff stick. However, this tariff extortion first caused the U.S. stock market to "have a heart attack."

That day, the U.S. stock market faced another "Black Friday," experiencing the worst sell-off in six months. The three major U.S. indices all closed lower, with the Dow dropping 878.82 points, a 1.9% decline; the Nasdaq falling 820.20 points, a 3.56% drop; and the S&P 500 index declining 182.60 points, a 2.71% fall. The Nasdaq and the S&P 500 index recorded their largest single-day drops since April.

Around $770 billion in market value was lost overnight for seven major U.S. tech giants, with Tesla down over 5%; Amazon nearly 5%; Apple and Meta down over 3%; Microsoft and Google down over 2%; and NVIDIA down 4.89%.

Economic concerns simultaneously dragged down copper prices and oil prices, with crude oil prices plummeting more than 4%, and prices of commodities such as soybeans, wheat, and cotton also falling sharply. The CBOE Volatility Index, known as the "fear indicator" of Wall Street, surged about 32% to its highest level since June.

According to a report by the Wall Street Journal on the 11th, Trump's tariff threats have also affected various trade-sensitive enterprises, including car manufacturers, clothing producers, and even health and beauty companies. The breadth of this U.S. stock market "dive" particularly focused on popular tech stocks and small and medium-sized bank stocks, leaving many analysts and portfolio managers deeply concerned.

The report explained that these Wall Street professionals had previously generally believed that the market gains this year had become "desensitized" to trade tensions. However, based on the current extent of the correction, some investors are worried that tech stocks may still be vulnerable to changes in political trends; while the selling of bank stocks has exposed a potential concern: the current U.S. economy is weak enough that any renewed trade friction with its largest import source country could lead to an economic recession.

Art Hogan, chief market strategist at B. Riley Wealth Management, analyzed, "Since April, the market has not been without setbacks, but this time it seems different, like a major issue that could derail the wheels."

"This is clearly not the news traders want to hear!" Steve Sosnick, chief strategist at Interactive Brokers, wrote in a report with irritation, "We've long been used to a generally upward and relatively calm market, so the rapid drop in the stock market was quite shocking."

The Nasdaq fell 3.56%, recording its largest single-day drop since April

According to Reuters, Sosnick also complained, "Clearly, Trump's comments are not beneficial to the market. We've finally gotten through the most severe phase of tariff concerns, only to find ourselves facing a new wave of trouble again, and his tone is too aggressive."

"This is definitely moving in the wrong direction for bilateral trade relations. Considering the speed of the market sell-off, this is certainly not a positive move for the market," he added.

The Wall Street Journal reported that over the past few months, the market had shown strong resilience in the face of the White House's tariff threats. But now, investors holding high-yield portfolios and high-valued stocks must take the risk of trade wars more seriously.

Michael O'Rourke from Jonestrading, a major U.S. brokerage, told Bloomberg, "Throughout the summer, greed in the U.S. stock market far exceeded fear, and this high level of complacency has left investors exposed to risks. This round of selling could evolve into a larger correction, especially if the trade truce comes to an end."

"Trump caught the market off guard again and brought more questions," Robert Pavlik, a senior portfolio manager at Dakota Wealth, also pointed out. Before Trump spoke, the market's extremely high optimism had already been questioned due to "overvalued assets."

The long-term rise has significantly increased corporate valuations, which has continued to heighten investors' concerns. Now, the market is extremely sensitive to any minor fluctuations, especially easily impacted.

Bloomberg also mentioned that since the market crash in April triggered by tariffs, the S&P 500 index has risen sharply due to optimism about artificial intelligence and expectations of Federal Reserve rate cuts. Currently, the index's valuation is close to one of the highest levels in 25 years, meaning that the market's buffer space for negative news is already very limited.

Sam Stovall, chief investment strategist at CFRA Research, has already broken out in a sweat, "A bull market doesn't end because it's old, but because of fear, and the biggest fear of a bull market is a recession."

This article is an exclusive piece from Observer Net. Unauthorized reproduction is prohibited.

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