US-China trade war returns as Trump's comments spark sell off, China launches probe into Qualcomm

Market Reaction to Trade War Escalation - President Trump threatens a significant increase in tariffs on Chinese imports, leading to a notable sell-off in the stock market [1][10][51] - The Dow is down 636 points, the S&P 500 down 2%, and the NASDAQ down 2.7%, marking one of the worst trading days since April [2][3][4] Sector Performance - Technology sector experiences the largest decline, with NASDAQ composite down 2.77% and major tech stocks like Tesla and Amazon seeing significant losses [4][7][8] - Consumer staples are the only sector showing slight gains, indicating a flight to safety among investors [7][8] Bond Market and Currency - Bond prices are rising, leading to a decrease in yields, with the 10-year Treasury yield down to 4.05% [4][5] - The US dollar is down 0.6%, contrasting with previous sell-offs where both the dollar and bonds were dumped [5][6] Trade Tensions and Economic Outlook - The potential for tariffs to rise back to 145% if the US-China truce is not extended by November 10 raises concerns about market stability [12][15] - Despite current volatility, some investors view this as a buying opportunity, citing a favorable policy mix and expected earnings growth through 2026 [14][17][20] Company-Specific Impacts - Qualcomm is under investigation by China's state market regulator, reflecting the ongoing trade tensions and their impact on US tech companies [29][30] - Companies like ELF Beauty, which sources 75% of its products from China, are particularly vulnerable to increased tariffs [52] Consumer Price Index (CPI) and Economic Indicators - The Bureau of Labor Statistics is recalling workers to compile the September CPI report, crucial for Social Security adjustments [33][36] - The CPI report is expected to influence Federal Reserve decisions, with implications for interest rates and economic forecasts [38][40]