US Stocks Tumble as China's Rare Earth Controls Spark Trade War Fears
The S&P 500 and Nasdaq posted their sharpest one-day drop since April after Beijing expanded export restrictions on critical minerals, fueling supply chain anxiety.
U.S. equities plunged in a broad market sell-off, with the S&P 500 closing down 2.69% and the tech-heavy Nasdaq Composite falling nearly 3.6% in their worst session since April. The sharp downturn was triggered by China's significant expansion of export controls on rare earth minerals, stoking fears of and escalating geopolitical trade tensions.
The restrictions, which broaden the list of controlled elements and associated technologies, were viewed by investors as a strategic move by Beijing to leverage its dominance in the global supply of critical minerals. The reaction from Washington was swift, with the White House threatening retaliatory tariffs and further export controls, which sent a chill through global markets. The sell-off was particularly acute in the technology sector, with the S&P 500 technology index falling four percent and a key .
While the broader market saw heavy losses, some companies bucked the trend. Shares of U.S. and other non-Chinese rare earth miners and processors surged on the news, as investors anticipated a spike in demand for alternative sources. Critical Metals Corp jumped nearly 18%, while MP Materials gained over 4%, reflecting a bet on the accelerating trend toward diversifying away from China. The move has major implications for U.S. national security, impacting the defense, clean energy, and high-tech manufacturing sectors that rely heavily on these materials.