US stocks end weak May on bitter note after latest US tariffs

VIDEO: REUTERS
Traders work on the floor of the New York Stock Exchange, May 31, 2019.
Traders work on the floor of the New York Stock Exchange, May 31, 2019.PHOTO: AFP

NEW YORK (AFP) - Wall Street stocks closed out a downcast May on an especially negative note, falling hard after President Donald Trump announced new tariff measures on Mexico.

Major indices were in the red the entire session after Trump unveiled his latest trade broadside on Twitter on Thursday night (May 30), vowing a string of gradual tariff increases to pressure Mexico into cracking down on illegal immigration into the United States.

The Dow Jones Industrial Average slumped 1.4 per cent to 24,815.04, ending the month with a 6.7 per cent loss, the first negative month of 2019.

The broad-based S&P 500 dropped 1.3 per cent to 2,752.06, while the tech-rich Nasdaq Composite Index shed 1.5 per cent, settling at to 7,453.15.

Trump's latest tariff move amounted to "another log on the fire of global risk aversion," analyst Joseph Manimbo of Western Union Business Solutions said in a client note.

"The news heightened fears of aggressive trade policy slowing growth in the US and globally, sending stocks and oil markets swooning, and investors ducking for cover in safer currencies like the yen, Swiss franc and greenback."

After four strong months to open 2019, the market took a southward turn in May as Trump's trade relations with China deteriorated, with fresh tariff announcements on both sides and other hostile moves dimming the odds of a near-term trade agreement.

 

Investors have also been unnerved by a sharp drop in US Treasury bond yields that has exacerbated anxiety about growth.

On Friday, the yield on the 10-year US Treasury fell further.

General Motors and Fiat Chrysler shed 4.3 per cent and 5.8 per cent, a recognition that the tariffs on Mexico will hit the auto industry especially hard.

Auto supply companies also fell, with Aptiv losing 6.7 per cent and Lear 5.8 per cent.

Retailers Gap and Williams-Sonoma moved in opposite directions after earnings statements, with Gap slumping 9.6 per cent and Williams-Sonoma winning 13 per cent.