NEW YORK, May 23 (Xinhua) -- U.S. stocks closed lower on Friday, ending the week with losses as investors reacted to U.S. President Donald Trump's new tariff threats.
Trump commented on Friday that Apple must pay a 25 percent tariff on iPhones sold but not made in the United States.
In the afternoon, Trump signaled that potential tariffs on mobile phones would not just target Apple but extend to other manufacturers like Samsung, stating, "It would be more, it would be also Samsung and anybody that makes that product, otherwise it wouldn't be fair." He added that companies that build manufacturing plants in the United States would be exempt from tariffs.
Trump also threatened to raise tariffs on European Union imports to a flat 50 percent starting June 1, as negotiations between the United States and the European Union showed little progress.
Following these remarks, all three major indexes closed off their session lows. The Dow Jones Industrial Average dropped 256 points, or 0.61 percent, the S&P 500 fell 0.67 percent, and the Nasdaq Composite lost 1 percent.
Among the S&P 500 sectors, technology took the biggest hit, falling 1.33 percent, while consumer discretionary and communication services also underperformed. Utilities, consumer staples, energy, and real estate managed to post modest gains.
"We've had this de-escalation tailwind at the market's back for like six weeks now -- and the market has had one of its best six-week stretches in the last 75 years -- and a re-escalation of trade war rhetoric threatens that. I don't think we'll retest the lows or anything like that, unless it really ramps up, but this is certainly a step in the wrong direction from the market's perspective," said Ross Mayfield, investment strategist at Baird, in an interview with CNBC.
Investor concerns were also fueled by fears that recent fiscal policy measures -- such as the tax bill -- could add trillions to the U.S. deficit, especially in the wake of Moody's recent downgrade of the U.S. credit rating. The 30-year Treasury yield eased slightly on Friday but remained above the 5 percent threshold, a level not seen since the financial crisis.
Looking ahead, next week will be a shortened trading week due to the Memorial Day holiday, with U.S. stock markets closed on Monday.
