U.S. stocks closed lower on Friday, capping off a week of losses as investors reacted to President Trump’s latest tariff threats and the potential economic impact of his tax bill. The Dow Jones Industrial Average dropped 0.6%, the S&P 500 fell roughly 0.7%, and the Nasdaq Composite, known for its tech-heavy composition, backed off about 1%. For the week, all three major indexes recorded declines of more than 2%.
Trump’s Tariff Threats Weigh on Markets
Investors faced heightened uncertainty as President Trump renewed his threats regarding tariffs on tech giants. The market was particularly rattled by his comments that Apple (AAPL) must pay a 25% tariff on iPhones sold in the U.S. but not made there. As Apple has shifted some manufacturing to India, this move added to concerns about trade tensions with China, where Apple’s key suppliers are based. The tech giant’s shares fell about 3% following Trump’s remarks.
Trump also indicated that other mobile phone manufacturers, including Samsung, would face similar tariffs unless they build plants in the U.S. “It would be more, it would be also Samsung and anybody that makes that product, otherwise it wouldn’t be fair,” Trump told reporters on Friday afternoon. “Again, when they build their plant here, there’s no tariffs. So they’re going to be building plants here.” This statement further soured sentiment in the stock market, adding to investor anxieties over future trade developments.
EU Tariff Threats and Supply Chain Concerns
In another move that unsettled investors, Trump threatened to raise tariffs on European Union imports to “a straight 50%” beginning June 1, as stalled trade talks with the EU persisted. His remarks disrupted the calm that had settled over Wall Street heading into the Memorial Day trading break. These tariff threats introduced further complications for companies already struggling with supply chain disruptions due to ongoing trade wars and escalating costs from the existing tariff structure.
Deficit Worries and Tax Bill Impact on Treasury Yields
Stocks also faced pressure from rising concerns over the U.S. deficit, which has been exacerbated by Trump’s massive tax bill. The tax plan, which recently cleared a significant hurdle in the House, has prompted fears that the deficit could balloon by trillions of dollars, stoking a surge in longer-dated Treasury yields. The 30-year yield (^TYX) held above the key level of 5% on Friday, despite easing slightly after recently reaching highs unseen since the financial crisis. The market’s concerns were further fueled by a Moody’s downgrade of U.S. debt, which also contributed to rising yields.
Focus on Nvidia Earnings and Volatility
As the earnings season continues, Wall Street’s attention is now turning to Nvidia (NVDA), with the chip giant set to report its earnings after the bell on Wednesday. Nvidia has found itself in the crosshairs of Trump’s trade policy and ongoing debates within Big Tech over costly investments in artificial intelligence. However, despite the challenges, options traders are anticipating a lower level of volatility in Nvidia’s stock following the release of its results, compared to the recent quarters filled with intense market fluctuations.
With a mix of tariff uncertainties and concerns over the deficit, investors face a tricky road ahead. As they await further developments from the tax bill and earnings reports, market sentiment remains fragile, and the outlook for U.S. stocks continues to be shaped by these economic and geopolitical factors.