Wall St falls as Trump tariff threats spark market uncertainty

U.S. stocks fell on Friday, notching a weekly loss, after President Donald Trump recommended 50% tariffs on European goods, reopening a new front in global trade tensions and unleashing a fresh wave of market uncertainty.

All three main Wall Street indexes pared early losses but each still ended lower and shed more than 2% for the week. Technology, communication services and consumer discretionary stocks were the biggest losers of the S&P 500’s 11 subsectors. Utilities, consumer staples and energy stocks gained.

Apple touched a two-week low and finished down 3% after Trump warned the iPhone-maker it could face potential 25% tariffs on phones sold to U.S. customers but not manufactured in the country.

Treasury yields eased from multi-month highs, falling 4.4 basis points to 4.509% for the benchmark U.S. 10-year note.

“If I were to put a headline on today’s story, it would be ‘Here We Go Again!’” said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California.

“This is Trump turning on the temperature on the tariff conversation with the EU and Apple. The markets were hoping that the worst was behind us when it comes to the tariff rhetoric. But in reality, there’s still some smoldering embers when it comes to the tariff talk,” St. Aubin added.

The Dow Jones Industrial Average fell 256.02 points, or 0.61%, to 41,603.07, the S&P 500 lost 39.19 points, or 0.67%, to 5,802.82 and the Nasdaq Composite lost 188.53 points, or 1.00%, to 18,737.21.

For the week, the Dow lost 2.47%, the S&P 500 fell 2.61%, and the Nasdaq shed 2.48%.

U.S. Treasury Secretary Scott Bessent said Trump did not believe the EU’s trade offers were of sufficient quality. He also said he hoped the threat of fresh tariffs would “light a fire under the EU” in negotiations.

Most megacap and growth stocks fell, including Amazon, Nvidia and Meta Platforms - which all lost more than 1%. Tesla ended down 0.5%.

The CBOE Volatility Index, Wall Street’s “fear gauge,” hit a more than two-week high and finished up 10%. Semiconductor stocks dropped 1.5%.

Deckers Outdoor slumped nearly 20% after the maker of UGG boots forecast first-quarter net sales below estimates and said it would not provide annual targets due to tariff-led macroeconomic uncertainty. Sportswear maker Nike dropped 2.1%.

Volume on U.S. exchanges was 17.67 billion shares, compared with the 17.73 billion average for the full session over the last 20 trading days.

Global equity funds have seen weekly outflows for the first time in six weeks, pressured by rising U.S. Treasury yields and mounting concerns over the U.S. debt burden and tax-cut legislation, following Moody’s downgrade of the U.S. sovereign credit rating.

According to LSEG Lipper, global equity funds saw $9.4 billion in net outflows, a sharp reversal from more than $20 billion in inflows the previous week.

U.S. equity funds led the retreat, with $11 billion in redemptions, followed by $4.6 billion from Asian funds. European equity funds, on the other hand, received $5.4 billion in inflows.

“We suspect investors will be more cautious about piling into the U.S. stock market after the turmoil in April, especially given concerns around fiscal policy,” said John Higgins, chief markets economist at Capital Economics.

“Those worries have coincided with another surge in long-dated Treasury yields this week following Moody’s downgrade of the U.S.’ sovereign credit rating and a poorly received 20-year auction,” he said.

The 30-year Treasury yield climbed to a 19-month high on Thursday, coming within a few basis points of its highest level since 2007, after the House of Representatives passed a tax-and-spending package that intensified debt concerns.

In contrast to equities, global bond funds attracted $21.6 billion in inflows, indicating that investors see bonds as appealing at current yield levels. U.S. bond funds took in $7.6 billion, European bond funds added $11 billion, and Asian bond funds saw $1.8 billion in net inflows.

By category, U.S. government bond funds received $2.8 billion, U.S. high-yield bond funds drew $1.2 billion, and European corporate bond funds gained $1.5 billion.

Money market funds also rebounded, taking in $18.1 billion, following $34 billion in outflows the previous week.

However, gold and precious metals commodity funds saw $1.7 billion in outflows, marking their third consecutive week of redemptions.

Emerging market (EM) bond funds extended their winning streak with a fourth straight week of inflows, adding $403 million, while EM equity funds posted minor outflows. Still, EM equity funds have attracted $10.6 billion year-to-date, a 43% increase from the same period last year.

“The renewed interest in EM is partially due to the concern people have about the end of U.S. exceptionalism and lack of visibility with regards to U.S. ambition,” said Alison Shimada, portfolio manager at Allspring Global Investments.