US Stocks Tumble as Trade and Shutdown Fears Mount
The S&P 500 shed 2.7% and volatility spiked as investors reacted to renewed US-China tariff threats and a prolonged government shutdown.
A dual threat of escalating trade tensions and a protracted government shutdown sent a shockwave through U.S. financial markets, triggering a broad sell-off that erased recent gains. The S&P 500 plunged 2.7%, marking one of its worst sessions of the year as investor sentiment soured dramatically. The downturn was widespread, with the tech-heavy Nasdaq Composite falling 3.6%.
The sell-off was fueled by fresh anxieties over the US-China trade relationship after the White House threatened , shattering a recent period of calm. This sudden escalation in rhetoric immediately impacted sectors sensitive to global trade, particularly technology and semiconductor stocks, prompting a flight to safety among investors.
Compounding the market's fears is the ongoing U.S. government shutdown, which has now entered its third week with no resolution in sight. The political deadlock in Washington has begun to have tangible consequences, as the White House moved forward with , raising concerns about the shutdown's broader economic impact and delaying key economic data releases.
Investor fear was palpable in the derivatives market, where the ProShares Ultra VIX Short-Term Futures ETF (UVXY), a popular measure of expected volatility, skyrocketed over 19%. This spike in the VIX reflects , who are now bracing for a period of sustained turbulence as geopolitical and domestic risks converge.