The stock market never ceases to amaze, and with President Donald Trump in the driver’s seat, the script can flip at a moment’s notice.
Friday, Oct. 10 was one of those days when the screens bled red, traders went into crisis mode, and the “buy-the-dip” muscle memory came up against arguably its toughest test since spring.
The spark was that President Trump announced his administration would slap 100% tariffs on Chinese imports, tightening U.S. software exports following Beijing’s move to curb rare-earth shipments.
Here’s what happened:
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Market cap wiped: The S&P 500 tanked 2.7%, marking the worst day since April, with the Nasdaq dropping 3.6% and the Dow off 878 points, wiping out nearly $1.5 trillion in U.S. market value, while crypto markets lost about $200 billion.
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Semis hit hardest: PHLX Semiconductor Index plummeted 6.3% as supply-chain and cost fears spiked.
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Crypto cracked: Bitcoin shed 8.4%, dropping to $104,800; Ethereum lost 5.8% as the tariff shock spilled into digital assets.
Amid all the noise, Fundstrat’s Tom Lee stepped in with a sharp counter-read on the brutal selloff, which is of critical importance for near-term returns and positioning.
For perspective, Tom Lee is one of Wall Street’s most seasoned commentators. He’s currently the co-founder and Head of Research at Fundstrat Global Advisors/FS Insight, having served as JPMorgan’s Chief U.S. Equity Strategist from 2007 to 2014.
Hence, with over 25 years in stock research, he’s known for layering data-driven optimism with sharp contrarian reads.
One of Wall Street’s most trusted bulls said out loud what many traders have been whispering: The rally might finally need a breather.
Following President Trump’s surprise tariff announcement on China, Fundstrat co-founder Tom Lee told CNBC after a rollicking 36% surge since April, the market’s pullback “may be overdue to an extent.”
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Despite the selloff, which is Wall Street’s worst in six months, Lee didn’t see panic in the tape.
Instead, he called out the VIX’s 51st-largest spike on record “a good flush that’s happening today,” noting that the incredible bursts of volatility usually precede recoveries instead of recessions. Lee added that the market’s rush to hedge “is usually a sign of an interim low.”
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Instead of sounding bearish, Lee essentially framed the day’s drop as a shakeout inside an ongoing bull cycle spearheaded by breakthrough tech like AI, blockchain, along with a Fed pivot toward easing.
