Trump’s comments on tightening tariffs on China and

10/13 U.S. stocks fall on Trump’s comments on tightening tariffs on China and news of administration starting layoffs

U.S. stock markets started higher on AI-related stocks, leaving the previous day’s decline behind. However, the decline began in earnest after Trump called China’s control of rare earth exports “hostile” and announced that he would raise tariffs on China on a large scale and take strong financial measures. In particular, Chinese stocks listed in the U.S. have fallen sharply, with semiconductor companies that require rare earths, and companies with high sales in China having high sales volume. On top of that, the White House announced that the dismissal of administration officials began, which led to further declines in the wake of increased job insecurity. In addition, the supply and demand of weekly option expiration dates have also been affected, resulting in increased volatility in major theme stocks (Dow -1.90%, Nasdaq -3.56%; S&P 500 -2.71%; Russell 2000 -3.01%; and Philadelphia Semiconductor Index -6.32%)

• Variables: U.S.-China conflict escalates, consumer sentiment index and job insecurity

U.S. President Trump has denounced China’s plan to impose export controls on rare earths and related production factors as “very strange and hostile.” It reveals that China has sent several countries a letter saying it wants control over “all elements used in production,” including items not manufactured in its own country, warning that it will “paralyze” markets and cause difficulties for the world, especially China. It also hinted at the possibility of canceling the summit, saying it has no reason to meet with President Xi Jinping at the APEC meeting, and is seriously considering massive tariff hikes and financial regulations on Chinese goods. While the response may be painful, he stressed that “in the end it will be very good for the United States.” Trump’s comments led to an escalating U.S.-China conflict and increased uncertainty, which led to a fall in Treasury yields and a slump in the stock market.

Meanwhile, the consumer sentiment index was released at 55.0, down 0.1p from last month’s announcement, but it is better than expected (54.0). As the stock market continues to rise, the current situation index has improved from 60.4 to 61.0. The expectation index shrank from 51.7 to 51.2 while high prices and worsening employment prospects are the main concerns of consumers. One-year expected inflation fell slightly from 4.7 percent to 4.6 percent, but is still high. In general, consumers show that “K-shaped consumption” continues, as Fed Chairman Powell noted. The sentiment index also shows that high-income earners’ consumption of stocks and other assets is solid but slowing down. Such “K-shaped consumption” is stable in the short term but may cause instability in the U.S. economy in the long term, so attention needs to be paid to it

On top of that, the White House’s director of budget management announced that the reduction of administrative officials has begun, suggesting that worsening government employment will become a reality in the future. Fed Director Waller mentioned job insecurity, saying that both ADP private employment data and employment reports indicate negative jobs, but the fact that government employment contraction could expand further this concern. Of course, the related news is a factor that could expand the Fed’s stance on interest rate cuts, but it is burdensome for the stock market in that it cuts interest rates due to economic instability. After the actual related news, the stock market fell further and the government bond interest rate fell further

• Featured Stocks: Nvidia, Tesla, Alibaba, IonQ, Palantir, Apple, Amazon And More Fall

Semiconductors: China’s Rare Earth Control and Trump’s Warning to China Drop
Nvidia (-4.89%) also hit an all-time high due to several positive factors, but it turned downward due to Trump’s comments on tightening regulations on China. AMD (-7.72%) fell sharply as recent gains were significant. Qualcomm (-7.29 percent) fell, also affected by news that it had begun an anti-trust investigation in China. Chipmakers such as Broadcom (-5.91 percent), Micron (-5.58 percent), AMAT (-4.70 percent), Ram Research (-6.83 percent), TSMC (-6.41%) and ASML (-4.52%) also fell. Rare earths are essential in the semiconductor industry, and news of China’s rare earth control could affect production instability in global semiconductor companies. Intel (-3.78%) unveiled its new Core Ultra series 3 process on Thursday, but fell. As a result, the Philadelphia Semiconductor Index plunged 6.32 percent.

AI-Related Companies: Open for Sale Amid Deterioration in Investor Sentiment
Applied Digital (+16.05%), an AI data center-related company, performed better than expected and surged due to the announcement of the conclusion of a new lease contract. AI server companies such as Super Microcomputer (-8.83 percent), Arista Network (-2.61%) and Coreweave (-3.25%) as well as AI service companies such as UI Pass (-7.89 percent), C3AI (-5.34 percent), Paladine AI (-11.71 percent), Recreation Pharmaceuticals (-9.98%) and Soundhound AI (-6.57%). While the preference for risky assets deteriorated, the U.S.-China conflict sharply shrank and investor sentiment fell.

Cars: Tesla Slips On Concerns Of U.S.-China Conflict Despite Good News
Tesla (-5.06%) started higher on positive news, with expectations that sales in China will increase due to the launch of the new Model Y and RBC raising its target price to $500, citing optimistic opportunities. However, the move was made due to heightened concerns over slowing sales in China, which is driving Tesla’s current expansion. While automakers such as GM (-1.02%) and Ford (-0.78%) also fell due to concerns over a possible U.S.-China conflict, they fell due to concerns over slowing sales amid economic instability at the start of the administration’s layoffs.

Secondary Cells, Lithium, Rare Earths, Uranium, Nuclear Power: Mixed By Stock, Paying Attention to Supply and Demand Factors
Quantumscape (-1.93 percent) rose due to expectations of full-fledged production expansion, including the recent signing of a joint battery development contract with Murata, but returned to the market due to the U.S.-China conflict. Lithium-related stocks such as Albemarle (-6.88 percent) and Lithium America (-6.84 percent) fell amid falling prices of lithium carbonate in China. Rare earth stocks such as MP Materials (+8.37 percent) surged on expectation of reflected profits due to China’s tightening of rare earth regulations. Natural Energy