A trade spat between the U.S. and China erupted Friday, sending U.S. stocks spiraling, with all three of the major averages down over 1% midday and on pace for the worst session since August.
The Dow Jones Industrial Average was off more than 500 points in afternoon trading. Still, all three of the major benchmarks remain near record highs.
Sources tell FOX Business that President Donald Trump is "pissed off" after a briefing about China's new announcement of export controls. Now, a meeting between Trump and Chinese President Xi Jinping due to take place in South Korea in two weeks, is likely to be scrapped.
President Donald Trump announces a deal with Pfizer to lower Medicaid drug prices in the Oval Office of the White House Sept. 30, 2025. (Win McNamee/Getty Images / Getty Images)
"I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so," he posted on Truth Social.
Trump also said he will be forced to financially counter the Chinese move. The source said large tariffs could be on the table.
A majority of the large sectors in the S&P fell, led by technology, energy and consumer discretionary, while utilities and consumer staples bucked the selling.
The Magnificent Seven stocks saw hefty declines, led by Amazon, Meta, Nvidia and Tesla.
"This is all a game of high stakes poker going on between the US and China in this AI Revolution as we are also seeing more scrutiny in Beijing around Nvidia's golden chips," Wedbush Securities analyst Dan Ives said in a research note to clients.
"These moments we view as buying opportunities to own the winners in semis, software, Big Tech, and the AI future as in our view these tensions will not bubble up into a much more tense time vs. the nervous period of time we saw in April."
Gold, a flight to safety, climbed above $4,000, hitting a fresh record. The yellow metal has gained about 50% this year and is among the top performing assets classes. Silver also hit a new high of $50 on Thursday and is sitting just below that level as of midday on Friday.
Gold prices hit a fresh record above $4,000 this week. (Getty Images / Getty Images)
Investors were buying exchange-traded funds that track the precious metals on Friday, including the SPDR Gold Trust, the largest backed by physical gold, and ProShares Ultra Silver.
Trade war woes also hit oil prices, which fell below $60 per barrel. The U.S. Brent Oil ETF and the U.S. Oil Fund were sharply lower.