Stocks closed sharply lower Friday, with the market logging its worst May since 2010, after President Donald Trump unexpectedly announced plans to impose tariffs on imports from Mexico in an attempt to pressure the country to stem the flow of migrants across the U.S. border.
Meanwhile, reports said China may be readying fresh retaliatory moves against the U.S. in that trade dispute, while data showed a contraction in Chinese manufacturing activity this month.
How did major benchmarks fare?
The Dow Jones Industrial Average DJIA, -1.41% dropped 354.84 points, or 1.4%, to 24,815.04. The S&P 500 index SPX, -1.32% fell 36.80 points, or 1.3%, to 2,752.06 and the Nasdaq Composite COMP, -1.51% dropped 114.57 points, or 1.5%, to 7,453.15.
May, which in recent years has been a good month for stocks, has been dismal this year with the Dow falling 6.7% while the large-cap index lost 6.6% and the Nasdaq declined 7.9%. For the week, the blue-chip gauge shed 3% for its sixth straight week of losses, the longest weekly retreat since June 2011. The S&P 500 was off 2.6% and the Nasdaq slid 2.4% for the week.
What drove the market?
Late Thursday, just as Asian markets began trading, Trump announced in a tweet that the U.S. would impose a 5% tariff on all goods from Mexico until that country stops the flow of illegal immigrants into the country. He said the tariffs will rise to 10% on July 1 if the crisis persists, and by another 5% for every successive month, up to 25% by Oct. 1.
“Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” Trump said.