Stocks finished lower on Friday, capping May with the first monthly decline of the year, as trade news continues to weigh on sentiment. The Dow dropped 355 points, the S&P 500 lost 1.3% and the Nasdaq Composite slid 1.5%.
The major averages retreated after President Trump announced plans late Thursday evening to implement a new 5% tariff on Mexican goods. White House officials also suggested the tariffs could continue to rise to 25% if Mexican officials don’t stop the flow of illegal immigration along the Southern U.S. border. General Motors, which has a supply chain with heavy exposure to Mexico, fell 4.3% amid a broad sell-off for automakers on the news. Energy stocks also lagged as WTI crude fell 5.9% to cap its worst monthly performance since November.
Breadth was negative on issues by 3:1 on the NYSE and 7:2 on the Nasdaq. Composite NYSE Volume was more than 3.7 billion shares.
The rise in trade tensions continued to spur demand for perceived safe-haven assets. Utilities and Real Estate were the only S&P 500 sectors to finish higher, while Gold climbed 1.4% on the session. U.S. Treasuries also rallied, as economic data left investors questioning inflation prospects. A report showed the core PCE deflator, which is the Fed’s preferred inflation gauge, rose at a muted 1.6% annualized pace in April. The yield on the benchmark 10-year Treasury note dipped eight basis points Friday to finish at 2.13%, the lowest level since September 2017.
For the week, the S&P 500 lost 2.6%, capping a 6.6% monthly retreat. The Dow’s 3.0% weekly decline left the blue chip benchmark 6.7% lower in May, while the Nasdaq shed 2.4% for the week and 7.9% for the month.