The US equities market experienced significant volatility from October 6-10, 2025, with major indices initially hitting record highs before suffering their steepest declines in months. The Dow Jones, S&P 500, and Nasdaq all closed sharply lower on October 10, leading to a weekly negative performance of around 2-3%. The risk aversion led Treasury Bond yields 5 to 10bps tighter, with corporate credit spreads widening 5 to 25bps.
The market sell-off was primarily driven by escalating U.S.-China trade tensions after Trump threatened new 100% tariffs on Chinese goods, creating widespread investor anxiety. Additional headwinds included the ongoing government shutdown and inflation worries mentioned in the Fed’s minutes.
Markets staged a strong recovery on Monday, October 13, with the Nasdaq posting its biggest one-day gain in months, +2.2%, led by semiconductor sector strength. The rally was fueled by continued momentum in artificial intelligence, highlighted by a major Broadcom and OpenAI partnership, as well as Trump's softer stance on China trade relations. The attention now moves to third-quarter earnings reports, starting with the major banks this week.
