In trading on October 22, the Dow Jones Industrial Average fell 0.8%, the S&P 500 fell almost 1%, and the Nasdaq Composite lost about 1.6%. The VIX volatility index, also known as Wall Street's "fear index," soared 13%, breaking the psychologically important 20-point mark.

The markets accelerated the fall amid the Reuters report on a possible trade escalation between the U.S. and China, CNBC notes. Donald Trump's administration is considering restricting a wide range of exports to China, from laptops to aircraft engines made with U.S. software, Reuters' interlocutors told Reuters. The plan could be a response to the latest round of Chinese restrictions on rare earth element exports, the sources added.

The Reuters interlocutors specified that this is not the only option being studied in the White House, and the measures may not be implemented. However, the very fact that such restrictions are being discussed shows that the Trump administration is considering a serious escalation of the confrontation with Beijing, the agency said.

The implementation of this plan would allow Trump to fulfill his promise to ban exports of "critical software" to China by restricting global shipments of goods that contain U.S. software or were manufactured using it, Reuters emphasizes. On October 10, Trump wrote in the social network Truth Social that he would impose additional duties of 100% on Chinese shipments to the United States, as well as new export restrictions on "any and all critical software" by November 1, causing markets to crash.

A Chinese embassy spokesman would not comment to Reuters on the specific measures, but said China opposes "unilateral extraterritorial jurisdictional moves" by the United States and vowed to "take decisive steps to protect its legitimate interests" if Washington continues down what Beijing sees as a misguided path.

The White House declined to comment to Reuters, and the U.S. Commerce Department did not respond to a request for comment.

The market remains vulnerable to any negative news following the S&P 500's meteoric rally, Bloomberg noted. "With stocks holding near record highs and company valuations looking inflated, investors are looking for exceptionally strong fundamentals to justify such high prices," City Index analyst Fiona Cincotta said in a statement from the publication.

This article was AI-translated and verified by a human editor

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