U.S. stock markets ended the week on a downbeat note, with major indexes broadly lower. Small- and mid-cap stocks suffered the steepest losses. At the same time, the S&P 500 and Dow Jones Industrial Average slipped back into negative territory for the year, erasing the modest gains of the previous week. The tech-heavy Nasdaq Composite proved more resilient but still declined 2.47%. Markets will be closed on Monday in observance of Memorial Day. The week began quietly but took a sharp turn midweek following a disappointing auction of 20-year U.S. Treasury bonds. The weak demand pushed long-term yields higher, with the 30-year yield reaching its highest since 2023. Although bond markets stabilized somewhat by Friday, the initial spike in yields was partly attributed to Moody’s recent downgrade of U.S. sovereign credit, reflecting growing concerns about rising federal debt and persistent fiscal deficits. These concerns were compounded later in the week when the House of Representatives passed President Trump’s new tax legislation, which many believe could significantly increase government borrowing in the coming years. Friday brought additional turbulence to equities after President Trump announced a 50% tariff on European Union imports starting June 1, citing a breakdown in trade negotiations. He also threatened to impose a 25% tariff on iPhones unless Apple relocates production to the United States, sending the company’s shares down over 3%. These escalating trade tensions and debt concerns weighed heavily on investor sentiment to close the week.
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Warren Gerow is an independent investment wealth consultant at Sightline Wealth Management.
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