US stock indices sell off amid renewed tariff worries

Macroeconomic/ geopolitical developments

• US stocks fell sharply from record highs last week, with the S&P 500, Nasdaq, and Dow all posting steep losses as renewed trade tensions, political uncertainty, and fears over the prolonged government shutdown triggered a broad market sell-off despite ongoing optimism around AI and interest rate cuts.

• US markets tumbled after President Trump threatened a major increase in tariffs on Chinese goods and export controls on software in response to China’s rare earth restrictions, raising fears of renewed trade tensions and disrupting investor sentiment.
• The US government shutdown is about to enter its third week, disrupting federal operations, delaying key economic data, and leaving hundreds of thousands of employees without pay, while negotiations remain deadlocked and analysts warn prolonged closure could dent fourth-quarter growth.

• The Federal Reserve’s September meeting minutes showed a dovish bias, with most officials supporting further rate cuts this year to address a weakening labor market amid manageable inflation, while highlighting uncertainties from tariffs and the ongoing government shutdown that have paused key economic data.
• The third-quarter earnings season kicks off this week with major US banks and key companies like American Express, Johnson & Johnson, and TSMC reporting, as investors gauge corporate performance amid a government shutdown, trade tensions, and limited economic data.

Global financial market developments

• US and global equity averages were lower, down from record highs.
• US and European bond yields were lower on the week
• The US Dollar Index rallied, before a sell off Friday.
• Gold futures surged to a record high, above $4000 per ounce.
• Oil futures plunged to a multi-month low.

Key this week

Central Bank Watch: It’s a relatively quiet week on the central bank front, with key highlights including the Reserve Bank of Australia’s Meeting Minutes on Tuesday. Investors will also be watching a series of speeches from officials at the Fed, Bank of England, and European Central Bank for clues on the future path of monetary policy.

Macro Data Watch: With the government shutdown, US data is limited. Notable non-US releases include the UK Employment Report on Tuesday and China’s CPI on Wednesday.

Earnings Watch: The US Q3 earnings season begins this week, led by major banks. JPMorgan, Wells Fargo, and Goldman Sachs are set to report on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday, marking the start of a closely watched reporting period for the financial sector.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued