Stocks Lose Steam In Final Minutes Of US Trading: Markets Wrap

Wall Street struggled to regain confidence in the wake of a Treasury selloff that shook markets amid fiscal concerns, with stocks dropping in the last stretch of US trading. Bonds and the dollar rose.

After a brief pause in equity selling, the S&P 500 lost steam to finish lower for a third consecutive day. That's the longest slide since April 8, when the gauge closed on the brink of a bear market. While the cohort of big techs outperformed, a decline in Apple Inc. late in the session soured the mood. That's even as long-term government bonds rebounded, with 30-year yields falling after approaching levels last seen in 2007.

While the pressure on Treasuries eased, a “material move lower” in bond yields would probably be required for stocks to have the green light to return to recent highs, according to Louis Navellier, chief investment officer at Navellier & Associates.

“Market volatility has resurfaced amid renewed uncertainty surrounding trade policy and the fiscal outlook,” said Mark Haefele at UBS Global Wealth Management. “With bond yields elevated and tariff and budget risks in focus, this volatility may persist as investors monitor further developments in policy.”

The recent turmoil in Treasuries reflected worries about the US's surging debt load, with anxiety being amplified after Moody's Ratings on Friday downgraded the nation as a top-notch sovereign credit. Investors are concerned that President Donald Trump's signature tax bill that narrowly passed the House would boost the nation's already swelling deficit.

For several market observers, the message from bond investors is clear: Unless the US gets its finances in order and soon, the perceived risks of lending to the government will increase, and borrowing costs on long-term Treasury debt will climb even further. That would make reducing the deficit even harder and lift the cost of money for households and companies.

The S&P 500 dropped less than 0.1%. The Nasdaq 100 added 0.2%. The Dow Jones Industrial Average was little changed.

The yield on 10-year Treasuries fell seven basis points to 4.53%. A dollar gauge added 0.2%. Bitcoin surpassed $111,000 for the first time.

“Even if the inability to reduce the deficit in the US doesn't lead to default, a large deficit still implies greater bond supply, and perhaps eventual inflation as the debt is monetized to avoid default,” said Thierry Wizman at Macquarie. “Either way, it makes nominal fixed-income instruments less attractive as long-term investments.”

The mood remains unsettled, according to Fawad Razaqzada at City Index and Forex.com, adding that elevated yields are “notoriously unfriendly” to risk assets.

“While Wall Street's recent pullback has been relatively contained, there's a palpable sense of trepidation that more turbulence could be on the horizon, raising doubts over the bullish narrative for US stocks,” he said.

Wall Street also waded through a few economic readings.

US business activity and output expectations improved as trade-related anxiety eased even as price pressures continued to mount. In a sign of a still healthy labor market, initial jobless claims dropped to the lowest in four weeks. Meantime, existing home sales unexpectedly fell.

“The ‘hard' economic data still do not indicate a US economy in distress,” said Don Rissmiller at Strategas. “Some activity has likely been pulled forward ahead of the implementation of tariffs. The payback should be starting now, and any whiff of bond market discipline on politicians will create additional headwinds for interest-rate sensitive sectors in the economy as budget negotiations proceed into the summer.”

Federal Reserve Governor Christopher Waller said the central bank could cut interest rates in the second half of 2025 if the Trump administration's tariffs on US trading partners settle around 10%.  

“If we can get the tariffs down closer to 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,” Waller said Thursday during an appearance on Fox Business.

Corporate Highlights:

• The Justice Department is probing whether Alphabet Inc.'s Google violated antitrust law with an agreement to use the artificial intelligence technology of a popular chatbot maker, according to people with knowledge of the matter.

• Pershing Square Capital Management built a new stake in Amazon.com Inc., calling it a “fantastic franchise” and noting that the investor acquired shares at an “extremely attractive” price.

• Apple Inc. is aiming to release smart glasses at the end of next year as part of a push into AI-enhanced gadgets, but it has shelved plans for a smartwatch that can analyze its surroundings with a built-in camera.

• President Trump's announcement that he's weighing a public offering of US mortgage giants Fannie Mae and Freddie Mac sent their shares soaring.

• Family members of people killed in two fatal crashes of Boeing Co.'s 737 Max jets are urging the US Justice Department to reject a possible deal that would allow the planemaker to avoid a criminal charge.

• Southwest Airlines Co. continues to see softness in air travel demand that emerged earlier this year and pushed many carriers to pull back their profit forecasts.

• Ralph Lauren Corp. expects its strong revenue growth to ease in the latter part of the year, striking a cautious note on US consumer spending.

• Advance Auto Parts Inc. soared after reporting comparable sales that fell less than expected in the first quarter.

• Novo Nordisk A/S is selling its blockbuster weight-loss drug Wegovy to new patients at $199 for the first month as easy access to cheaper copycats comes to an end.

• Manchester United Plc tumbled after the football club lost an all-or-nothing Europa League final against English rival Tottenham Hotspur.

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 4 p.m. New York time

• The Nasdaq 100 rose 0.2%

• The Dow Jones Industrial Average was little changed

• The MSCI World Index fell 0.3%

• The Bloomberg Magnificent 7 Total Return Index rose 0.8%

• The Russell 2000 Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.5% to $1.1279

• The British pound was little changed at $1.3418

• The Japanese yen fell 0.2% to 144.01 per dollar

Cryptocurrencies

• Bitcoin rose 2.6% to $111,092.3

• Ether rose 5.3% to $2,641.5

Bonds

• The yield on 10-year Treasuries declined seven basis points to 4.53%

• Germany's 10-year yield was little changed at 2.64%

• Britain's 10-year yield was little changed at 4.75%

Commodities

• West Texas Intermediate crude fell 1.1% to $60.88 a barrel

• Spot gold fell 0.7% to $3,290.51 an ounce