Stocks moved lower last week as fiscal fears and fresh tariff threats loomed over market sentiment.
The Standard & Poor’s 500 Index fell 2.61 percent, while the Nasdaq Composite Index dropped 2.47 percent. The Dow Jones Industrial Average slid 2.47 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, advanced 1.14 percent.1,2
Stocks Slip
On Monday, stocks were under a bit of pressure after credit rating agency Moody’s downgraded the U.S. as an issuer of government bonds.3,4
Stocks remained under pressure midweek as Treasury yields moved higher with the 30-year bond hit a 19-month high. Investors fretted about the budget deficit; some feared the deficit would be made worse by the spending bill winding its way through Congress. After the House of Representatives approved the bill, bond yields backed off their highs and stocks went sideways.5,6
On Friday, stocks dropped after President Trump warned of a 50 percent tariff on European Union goods following an apparent stall in trade negotiations. At the same time, the administration also threatened a 25 percent tariff on any iPhones manufactured outside of the U.S.7
Unexpected Tariff News
The president’s fresh tariff talk ended a week or so of relative tranquility on the trade front. While the EU tariff threat may end with a deal similar to deals with other countries and regions, the iPhone issue may prove stickier.
Some analysts estimate that making iPhones in the U.S. would increase manufacturing costs by as much as 50 percent, which might increase the price of an iPhone.8
Footnotes and Sources
- WSJ.com, May 23, 2025
- Investing.com, May 23, 2025
- CNBC.com, May 19, 2025
- CNBC.com, May 20, 2025
- CNBC.com, May 21, 2025
- CNBC.com, May 22, 2025
- WSJ.com, May 23, 2025
- MarketWatch.com, May 23, 2025
