after Moody's downgraded the U.S. credit rating late last Friday and the
U.S. House of Representatives narrowly approved Trump's sweeping tax cuts on Thursday. The new tax-cut bill is expected to add almost $4 trillion to the U.S. federal government's $36 trillion debt pile. "Tariffs are back at the forefront," said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.
"I think the 25% tariffs on iPhones and Apple was a little bit of a surprise. It seemed like there was going to be an exemption there, and the market is reacting more to that than the EU news, and is interpreting that as a hardening of the stance by President Trump and the administration as opposed to seeking a negotiating path."
The Dow Jones Industrial Average fell 256.02 points, or 0.61%, to 41,603.07. The S&P 500 dropped 39.19 points, or 0.67%, to 5,802.82 and the Nasdaq Composite slipped 188.53 points, or 1.00%, to 18,737.21.
All three major U.S. stock indexes had fallen more than 1% early in the day.
For the week, the Dow lost 2.47%, the S&P 500 fell 2.61%, and the Nasdaq shed 2.48%.
MSCI's gauge of stocks across the globe fell 2.86 points, or 0.33%, to 868.15. The pan-European STOXX 600 index fell 0.93%.
The White House paused most of the punishing tariffs Trump announced in early April against nearly every country. He left in place a 10% baseline tax on most imports, and later reduced his massive 145% tax on Chinese goods to 30%.
"Markets go through a cycle with tariffs - freak out and sell when they are announced ..., freak out and buy (when) they are paused," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.
The 30-year U.S. bond yield, which on Thursday hit the highest since October 2023, fell in response to fresh tariff fears.
The yield was down 2.2 basis points at 5.042%. The yield on benchmark U.S. 10-year notes fell 3.6 basis points to 4.517%.
Thirty-year bonds have taken the brunt of the price selloff and posted the largest weekly increase in yields since April 7. Yields move the opposite direction to prices.
Gold, which has surged in recent months as economic anxiety has risen, was higher. Spot gold rose 2.14% to $3,364.74 an ounce.
Oil prices gained as U.S. buyers covered positions ahead of the three-day Memorial Day weekend.
Brent crude futures settled at $64.78 a barrel, up 34 cents, or 0.54%. U.S. West Texas Intermediate crude futures finished at $61.53, up 33 cents, or 0.54%.
