NEW YORK — On Friday, U.S. financial markets experienced a setback following a strong tariff warning from President Donald Trump, who indicated that 50% tariffs on European Union goods might be imposed within just over a week. The impact on Wall Street was significant, with the S&P 500 closing down by 0.7%, marking its poorest performance in seven weeks. The Dow Jones Industrial Average declined by 256 points, equivalent to a 0.6% dip, while the Nasdaq composite fell by 1%.
Before the U.S. markets opened, Trump took to his Truth Social platform to express frustration at the lack of progress in trade discussions with the European Union, suggesting the potential imposition of “straight 50%” tariffs starting on June 1. Given the EU’s status as one of the U.S.’s key trading partners, this news led to immediate reactionary declines in European markets, with the French CAC 40 index plummeting by 1.7%. This sentiment quickly crossed the Atlantic, impacting U.S. market futures, which had previously been poised for minor movement as trading commenced.
The S&P 500 initially slid by as much as 1.3% once trading kicked off but managed to claw back some losses. Investors speculated whether Trump’s move was merely a tactical ploy in ongoing negotiations or signaled something more concrete. Apple particularly felt the weight of these developments, dropping 3% in value after the President took aim at the tech giant. Trump reiterated pressure on Apple to relocate iPhone production to U.S. soil and threatened a tariff “of at least 25%,” should the company not comply.
Clarifying his earlier remarks, Trump stated that the proposed tariffs would extend to all smartphones manufactured abroad, potentially activating by the end of June. “It would be also Samsung and anybody that makes that product,” he added, citing a need for fairness. Trump’s approach of spotlighting individual companies has been a recurring theme, notably when he instructed Walmart to “eat the tariffs” alongside China following concerns about increased import costs potentially leading to retail price hikes.
Amidst this climate of uncertainty, companies like Deckers Outdoor, known for Hoka and Uggs, opted to refrain from issuing long-term financial projections. Instead, they provided short-term guidance that failed to meet analysts’ revenue and profit expectations, driving a 19.9% plunge in their stock despite posting stronger-than-anticipated earnings for the previous quarter. Meanwhile, Ross Stores saw a 9.8% drop in its shares after withdrawing its full-year financial forecasts, citing the predominance of Chinese-produced goods in its sales and the likely profit pressures posed by elevated tariff levels.
In contrast, software firm Intuit emerged as a Wall Street victor, its stock climbing 8.1% after reporting quarterly profits surpassing analyst predictions. Beyond delivering robust figures, Intuit also upgraded its revenue and profit forecasts for the complete fiscal year, boosting investor confidence. The nuclear energy sector also enjoyed gains, with Oklo seeing a 23% increase following Trump’s executive orders aimed at expediting nuclear licensing and revitalizing the industry.
To summarize, the S&P 500 concluded the day at 5,802.82, tumbling by 39.19 points; the Dow Jones Industrial Average descended to 41,603.07, and the Nasdaq composite decreased to 18,737.21. Trump’s tariff announcement unsettled the markets, undoing much of the recovery from previous losses tied to trade tensions that at one point sank the S&P 500 by about 20% below its historical peak. However, after Trump suspended certain tariffs, especially on China, the index had regained ground to within 3% of its all-time high.
On the bond market front, Treasury yields slid after a spell of volatility, closing at 4.51% from 4.54% late Thursday on the 10-year note. Earlier in the week, yield rates were trending higher amid trepidations over the potential economic impact of the U.S. government’s aggressive tax-cutting measures leading to a significantly ballooned national debt.
Internationally, Asian stock markets displayed mixed outcomes, with Tokyo’s Nikkei 225 inching up 0.5%, while Shanghai stocks retreated by 0.9%, both closing before Trump’s latest tariff statements.