Investing.com--The S&P 500 cut some losses but remained under pressure Friday, after U.S. President Donald Trump reignited trade concerns, recommending a 50% tariff on EU goods while threatening Apple (NASDAQ:AAPL) with duties on foreign-made iPhones.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell 256 points, or 0.6%, the S&P 500 index dropped 0.7%, and the NASDAQ Composite slipped 1%.
Trump reignites trade worries
President Trump said on Friday that he is recommending a straight 50% tariff on goods from the European Union starting on June 1, saying the EU has been hard to deal with on trade.
"The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump said on Truth Social social media site. "Our discussions with them are going nowhere!"
The Trump administration had imposed 25% tariffs on EU cars, steel and aluminium in March and 20% tariffs on other EU goods in April. It then halved the 20% rate until July 8, setting a 90-day window for talks to reach a more comprehensive tariff deal.
In response, the 27-nation EU suspended its own plans to impose retaliatory tariffs on some U.S. goods and proposed zero duties for all industrial goods on both sides.
Additionally, Trump posted on Truth Social that iPhones sold in the U.S. must be made in the country and if they are not “a tariff of at least 25% must be paid by Apple.” The move against Apple by Trump would be the first against a specific company in his tariff rollout this year.
Apple stock fell sharply as a result.
Tax bill clears House
Investors had remained on edge over stretched U.S. debt levels, especially after Moody’s last week cut its U.S. sovereign rating over debt concerns.
Treasury yields have shot up this week as investors dumped government bonds, while an auction of 20-year bills also saw weak demand.
The House of Representatives voted to narrowly approve a sweeping tax cut and spending bill backed by Trump on Thursday, sparking more uncertainty over U.S. debt. The Congressional Budget Office, a non-partisan analytics agency, said that the bill in its current form will add about $3.8 trillion to the federal government’s $36.2 trillion debt pile over the next decade.
The legislature now heads to the Senate for more discussions and an eventual vote.
Path to rate cuts late this year - Waller
Concerns about the country’s fiscal health have added to economic worries given the uncertainty surrounding the Trump administration’s trade policies.
Federal Reserve Governor Christopher Waller said on Thursday he still sees a path to interest rate cuts later this year.
"If we can get the tariffs down close to the 10% and then that’s all sealed, done and delivered somewhere by July, then we’re in good shape for the second half of the year, and then we’re in a good position to kind of move with rate cuts through the second half of the year," Waller said.
Markets did take some relief from a Supreme Court ruling that the Federal Reserve was unique, dismissing the possibility of Trump firing Chair Jerome Powell, who the president has repeatedly badgered to cut interest rates.
Tesla outsold by BYD (SZ:002594) in Europe
In the corporate sector, Tesla (NASDAQ:TSLA) was in the spotlight, after a report indicated that Chinese electric vehicle rival BYD outsold its U.S. rival for the first time in Europe.
A report from analytics firm JATO Dynamics said BYD registered 7,231 battery-powered vehicles in Europe in April, overtaking the 7,165 units registered by Tesla.
BYD’s sales also came despite the European Union imposing steep import tariffs on Chinese EVs last year.
Elsewhere, Ross Stores (NASDAQ:ROST) stock slumped after the discount retailer issued weaker-than-expected guidance for the second quarter, citing concerns over tariffs and macroeconomic uncertainty.
Deckers Outdoor Corporation (NYSE:DECK) stock traded sharply lower after the maker of UGG boots said it would not provide annual targets owing to tariff-led macroeconomic uncertainty and forecast first-quarter net sales below estimates.
On the flip side, Intuit (NASDAQ:INTU) stock surged after the software group raised its full-year guidance and issued an upbeat current-quarter outlook as a strong tax season spurred demand for its TurboTax and QuickBooks software.
Peter Nurse, Ambar Warrick contributed to this article.