Financial Markets                      10/10 15:36

   

   NEW YORK (AP) -- A monthslong calm on Wall Street shattered Friday, and U.S. 
stocks tumbled after President Donald Trump threatened to crank tariffs much 
higher on China.

   The S&P 500 sank 2.7% in its worst day since April. The Dow Jones Industrial 
Average dropped 878 points, or 1.9%, and the Nasdaq composite fell 3.6%.

   Stocks had been heading for a slight gain in the morning, until Trump took 
to his social media platform and said he's considering "a massive increase of 
tariffs" on Chinese imports. He's upset at restrictions China has placed on 
exports of its rare earths, which are materials that are critical for the 
manufacturing of everything from consumer electronics to jet engines.

   "We have been contacted by other Countries who are extremely angry at this 
great Trade hostility, which came out of nowhere," Trump wrote on Truth Social. 
He also said "now there seems to be no reason" to meet with China's leader, Xi 
Jinping, after earlier agreeing to do so as part of an upcoming trip to South 
Korea.

   The ratchet higher in tensions between the world's largest economies led to 
widespread drops across Wall Street, with roughly six out of every seven stocks 
within the S&P 500 falling. Nearly everything weakened, from Big Tech companies 
like Nvidia and Apple to stocks of smaller companies looking to get past 
uncertainty about tariffs and trade.

   The market may have been primed for a slide. U.S. stocks were already facing 
criticism that their prices had shot too high following the S&P 500's nearly 
relentless 35% run from a low in April. The index, which dictates the movements 
for many 401(k) accounts, is still near its all-time high set earlier in the 
week.

   Critics say the market looks too expensive after prices rose much faster 
than corporate profits. Worries are particularly high about companies in the 
artificial-intelligence industry, where pessimists see echoes of the 2000 
dot-com bubble that imploded. For stocks to look less expensive, either their 
prices need to fall, or companies' profits need to rise.

   Levi Strauss dropped 12.6% for one of the market's larger losses, even 
though it reported a stronger profit for the latest quarter than analysts 
expected.

   Its forecast for profit over the full year was also within range of Wall 
Street's estimates, but the jeans and clothing company could simply be facing 
the challenge of heightened expectations after a big run. Its stock price came 
into the day with a surge of nearly 42% for the year so far.

   All told, the S&P 500 fell 182.60 points to 6,552.51. The Dow Jones 
Industrial Average dropped 878.82 to 45,479.60, and the Nasdaq composite sank 
820.20 to 22,204.43.

   Some of Friday's strongest action was in the oil market, where the price of 
a barrel of benchmark U.S. crude sank 4.2% to $58.90.

   It fell as a ceasefire between Israel and Hamas came into effect in Gaza. An 
end to the war could remove worries about disruptions to oil supplies, which 
had kept crude's price higher than it otherwise would have been.

   Losses accelerated following Trump's tariff threat, which could gum up 
global trade and lead the economy to burn less fuel. Brent crude, the 
international standard, dropped 3.8% to $62.73 per barrel.

   In the bond market, the yield on the 10-year Treasury sank to 4.05% from 
4.14% late Thursday.

   It had already been lower before Trump made his threats, as a report from 
the University of Michigan suggested that sentiment among U.S. consumers 
remains in the doldrums.

   "Pocketbook issues like high prices and weakening job prospects remain at 
the forefront of consumers' minds," according to Joanne Hsu, director of the 
Surveys of Consumers. "At this time, consumers do not expect meaningful 
improvement in these factors."

   The job market has slowed so much that the Federal Reserve cut its main 
interest rate last month for the first time this year. Fed officials have 
penciled in more cuts through next year to give the economy additional 
breathing room. But Chair Jerome Powell has also said they may change course if 
inflation stays high. That's because lower interest rates can push inflation 
even higher.

   One potentially encouraging signal from the University of Michigan's 
preliminary survey said consumers' expectations for inflation in the coming 
year edged down to 4.6% from 4.7% the month before. While that's still high, 
the direction of change could help the Fed and limit upward pressure on 
inflation.

   In stock markets abroad, indexes fell across much of Europe and Asia.

   Hong Kong's Hang Seng fell 1.7%, and France's CAC 40 dropped 1.5% for two of 
the bigger moves. But South Korea's Kospi leaped 1.7% after trading reopened 
following a holiday.

   ___

   AP Writer Teresa Cerojano contributed.

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