Markets spent last week adjusting after a strong early rally gave way to renewed caution. A fresh round of U.S.–China trade tension, new export controls from Beijing, and the second week of a government shutdown all reminded investors that progress in a global economy rarely moves in a straight line.

Major U.S. indices ended the week lower, giving back some of their recent gains. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each declined between 2% and 3%, while international markets, as measured by the MSCI EAFE Index, slipped about 1.6%.^1,2

From Record Highs to a Reality Check

Stocks began the week with optimism, bolstered by merger activity and steady economic data. By midweek, both the S&P 500 and Nasdaq reached record highs, brushing aside concerns about the ongoing government shutdown.

That optimism faded by Friday, when new tariffs on Chinese imports sent markets lower—led by semiconductor and technology shares. The result was the sharpest single-day market drop since April, closing the week with a more measured tone.^3,4,5

Global Interdependence in Focus

Markets also reacted to China’s new export restrictions on rare earth metals—critical materials for AI chips, renewable energy components, and defense technologies. With China producing nearly 70% of the global supply, the move underscored how concentrated the world’s most strategic resources remain.⁸

The U.S. response was swift, threatening to postpone an upcoming meeting with China’s president. Together, these developments highlighted how intertwined policy, technology, and trade have become—and how quickly those connections can influence global markets.

Meanwhile, the government shutdown entered its second week. Historically, shutdowns have had limited long-term market impact, but they tend to amplify uncertainty at a time when investors are already processing multiple crosscurrents.⁹

Perspective Amid Short-Term Volatility

Pullbacks like last week’s are a natural part of the market’s rhythm—pauses that allow valuations and expectations to recalibrate. They also remind investors of the value of perspective: growth is rarely linear, and resilience often emerges from moments of uncertainty.

At CogentBlue, we focus on helping clients navigate that bigger picture—staying aligned with long-term goals, even when headlines shift week to week.