Market pulls back from record highs amid tensions with China
Market pulls back from record highs amid tensions with China
The stock market ended the week with its first meaningful pullback in months, as early‐week gains and record highs gave way to a broad‐based selloff on Friday.
The S&P 500 (‐2.4%), Nasdaq Composite (‐2.5%), and Dow Jones Industrial Average (‐2.7%) all finished lower for the week, while smaller‐cap indices also retreated, with the Russell 2000 (‐3.3%) and S&P MidCap 400 (3.9%) underperforming. The recent cycle of “buy‐the‐dip to fresh record highs” was disrupted as investors reacted to renewed trade tensions between the U.S. and China.
Mega‐cap technology and AI‐related names led the market higher earlier in the week. Advanced Micro Devices soared after announcing a multigigawatt partnership with OpenAI, while NVIDIA, Dell, and Microsoft also posted strong gains midweek, helping the S&P 500 and Nasdaq Composite achieve record intraday and closing highs. Tesla contributed to early‐week momentum with product teasers, though enthusiasm faded following a more modest‐than‐expected Model Y announcement on Tuesday.
The week’s later selloff was triggered by President Trump’s comments on China and Beijing’s tightening of export controls for rare earths, which reignited trade concerns and prompted broad risk‐off sentiment. The information technology (‐2.5%), consumer discretionary (‐3.3%), communication services, and materials (‐3.1%) sectors were among the hardest hit. The energy sector (‐4.0%) also suffered as crude oil prices fell on Friday, while defensive sectors were the lone bright spots: the utilities (+1.4%) and consumer staples (+0.6%) sectors finished the week with gains.
Friday’s selloff was widespread, with decliners outpacing advancers roughly 5‐to‐1, and marks the most significant macro‐driven pullback since sweeping tariff announcements in April.
Treasuries rallied as equities sold off, with the 2‐year yield falling to 3.52% and the 10‐year settling at 4.05%, approaching September lows. Market attention now shifts to corporate earnings and the potential implications of ongoing geopolitical uncertainty, leaving investors to weigh risk appetite against defensive positioning as the market navigates this post‐record higher volatility environment.
- S&P 500: 2.4% WTD
- Nasdaq Composite: 2.5% WTD
- DJIA: 2.7% WTD
- Russell 2000: 3.3% WTD
- S&P Mid Cap 400: 3.9% WTD
To download the printable version, CLICK HERE.
Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.
Data and rates used were indicative of market conditions as of the date shown and compiled by Briefing.com. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
Park Avenue Securities LLC (PAS) is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.
Provided by Briefing.com.
8076115.17 (Exp. 1/26)