The third anniversary of the bull market took an unexpected turn on Friday as President Donald Trump’s latest comments on China sent shock waves through financial markets, erasing 2.7% from the S&P 500 in a single trading session. What was expected to be a modest celebration of America’s longest stretch of market gains in a decade quickly transformed into another episode of geopolitical brinkmanship, this time over the world’s most strategic resources— rare earth metals—and marked by a fresh round of Chinese export restrictions.

Investors entered Friday morning with cautious optimism. The S&P 500 had drifted higher for much of the week, setting fresh record highs along the way. But by midday, sentiment had shifted sharply after Trump issued a lengthy Truth Social post stating, among other things, that the U.S. is considering a “massive increase of Tariffs on Chinese products” coming into the U.S. He then said the U.S. would impose tariffs of 100% on Chinese imports “over and above any tariff they are already paying” beginning on Nov. 1.

“Some very strange things are happening in China!” Trump wrote against the backdrop of a scheduled meeting later in October with President Xi Jinping in South Korea, ahead of the Asia-Pacific Economic Cooperation summit. Trump wrote that China is “becoming very hostile,” arguing that the export controls on rare earths would clog world markets for the precious resource. Repeatedly in 2025, Trump’s tariffs-heavy trade regime has been countered by China, which holds the trump card of rare earths, essential for high-tech manufacturing.

The S&P 500 slid 2.7% in afternoon trading, while the Dow Jones industrial average dropped nearly 900 points, down 1.9%. Tech and green energy sectors, both heavily reliant on rare earth minerals such as neodymium and dysprosium, bore the brunt of the selloff.

Rare earths and real risks

Rare earth elements—a group of 17 metals critical for producing everything from smartphones and wind turbines to missile guidance systems—have long been a choke point in U.S.-China relations. China controls more than 60% of global production and nearly 90% of processing capacity.

Trump’s post accused Beijing of “a rather sinister and hostile move, to say the least.” He said he had not spoken to his Chinese counterpart, but that he was surprised by the new restrictions, and that there “seems to be no reason” to go ahead with meeting Xi in two weeks’ time.

Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, wrote in a statement to Fortune that “true to form,” October is already living up to its “reputation as one of the most volatile months and the sell-off that many were expecting … has finally arrived.” He noted this time of year is historically volatile and stocks were “priced-to-perfection” coming into the month, so it’s no surprise they were knocked down from all-time highs. Zaccarelli wrote that Northlight thinks more volatility is possible in the coming weeks, but absent some kind of real blow to the economy, the market should stage a rebound later this year.

Similarly, Jamie Cox, Managing Partner for Harris Financial Group, agreed in a separate statement that “October finally showed up for markets today. With major indices looking to consolidate, the tariff noise was all it took to kick it off.”

Jeff Buchbinder, Chief Equity Strategist for LPL Financial, wrote that markets got a reminder that sell-offs can be “violent” when a negative catalyst interrupts a market narrative that priced in “a lot of optimism.”

Chinese tech companies saw steep declines, with Alibaba, Baidu, and JD.com among the hardest hit; Alibaba dropped as much as 10%, Baidu over 8%, and JD.com by more than 6%. U.S. technology stocks with significant China exposure, like Nvidia, AMD, and Tesla, also fell; Nvidia lost 4.89%, AMD dropped 7.7%, and Tesla slipped more than 5%.

Companies tied to rare earth minerals, on the other hand, saw dramatic gains. MP Materials rose by as much as 15% and USA Rare Earth by as much as 19% before paring gains, while NioCorp Developments climbed by 8%.

[This report was updated to update share movements and include additional market commentary in reaction to the sell-off.]

Trump’s new China tariff sparks wide sell-off, wiping 2.7% off the S&P 500 on the bull market’s third birthday