(The Closing Bell will be updated sometime after 4:00 PM CDST to include the latest updates from IBD and Bloomberg Evening Briefing.)
FYI: Stocks and bond yields around the world fell Friday after President Trump threatened to impose escalating tariffs on Mexico, capping a brutal month for markets as rising trade tensions roiled investor confidence.
The threat pushed stock markets down as investors feared applying tariffs on Mexican products could hurt corporate earnings, increase prices for U.S. consumers and crimp economic growth. As investors sold stocks, they moved to government bonds, gold and the Japanese yen, all assets typically perceived as safer. The Mexican peso fell 2.5% against the dollar as investors reacted to concerns about the country’s ability to withstand tariffs from its largest trading partner.
The Dow Jones Industrial Average fell about 354 points, or 01.41%, in recent trading, while the S&P 500 also fell 1.32% and the Nasdaq Composite fell 1.41%, erasing Thursday’s slight gains for the indexes. The Dow industrials are on track for their sixth consecutive week of losses, the longest losing streak since 2011, and set to end May down more than 6%, their biggest one-month decline since December.
The yield on 10-year U.S. Treasurys declined to 2.149% from 2.227% on Thursday, hitting a fresh 20-month low. Yields on German 10-year bunds fell to minus 0.208%, matching an all-time low reached in July 2016. Dutch 10-year government bond yields turned negative for the first time since October 2016, at minus 0.011%. Yields and prices move in opposite directions. Gold, a haven investors tend to put money in when they’re worried about the economy, rose 1.3% to $1,308.40 a troy ounce.
Mr. Trump said late Thursday that the U.S. would impose escalating tariffs on its southern neighbor starting June 10, unless the country takes action to deter the flow of Central American migrants passing through its borders. The levies could hit 25% by October if Mexico fails to satisfy the White House’s demands.
Among the stocks that have been hit particularly hard by the tariff news was Constellation Brands, maker of Corona and Modelo beers. Shares fell 6.7%, while Kansas City Southern, which operates a railroad that extends into Mexico, dropped 5.7%.
Bank stocks, which have struggled all month, fell further on Friday, with Bank of America Corp. off 1.6%, putting its monthly loss at 13%. The KBW Nasdaq Bank Index is off 1.2% on Friday, and off nearly 10% in May.
Shares of auto makers and their suppliers, which are highly exposed to trade fluctuations, were among the biggest losers. In the U.S., General Motors and Ford were down more than 2.5% in recent trading. Both companies have extensive manufacturing footprints in Mexico and rely on a network of suppliers that transport raw materials and semifinished products back and forth across the border.
In Europe, the Stoxx Europe 600 was down 1.1%, with Germany’s export-heavy DAX index down 1.7% and the U.K.’s FTSE 100 falling 1%.
Energy prices slid even lower, with U.S.-traded crude oil down 2.2% to $55.33 a barrel. The price of oil is on track to drop more than 13% in May, which would be its worst single month since November when it fell 22%.
Weakness in Europe followed a tough session in Asia, where Hong Kong’s Hang Seng fell 0.8% and the Shanghai Composite lost 0.2%. The Hang Seng fell more than 9% in May while the Shanghai Composite lost 5.8%, marking both of their biggest one-month drops since October.
Regards,
Ted
Bloomberg Evening Briefing:
http://lipperalpha.refinitiv.com/wp-content/uploads/2019/05/Taxable_Investment_Objective_Performance_Summary-3.pdfMarketWatch:
https://www.marketwatch.com/story/stock-futures-tumble-as-trump-tariffs-on-mexico-open-new-trade-worries-2019-05-31/printWSJ:
https://www.wsj.com/articles/global-stocks-and-bond-yields-drop-on-mexico-tariff-concerns-11559289992Bloomberg:
https://www.bloomberg.com/news/articles/2019-05-30/asia-stocks-to-steady-treasury-rally-extends-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-dives-355-points-stock-indexes-break-support/CNBC:
https://www.cnbc.com/2019/05/31/us-stock-futures-fall-after-trump-announces-new-tariffs-on-mexico.htmlReuters:
https://www.reuters.com/article/us-usa-stocks/wall-street-reels-as-trump-threatens-tariffs-on-mexico-idUSKCN1T11GOU.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-felled-by-trump-tariff-threat-china-data-gloom-idUKKCN1T10PREurope:
https://www.reuters.com/article/us-europe-stocks/european-stocks-stumped-as-u-s-threatens-tariffs-on-mexico-idUSKCN1T10QQAsia:
https://www.marketwatch.com/story/asian-markets-mixed-on-new-trade-worries-after-trumps-tariffs-against-mexico-2019-05-30/printBonds:
https://www.cnbc.com/2019/05/31/us-bonds-fresh-trade-tensions-and-recession-fears.htmlCurrencies:
https://www.cnbc.com/2019/05/31/peso-plunges-vs-the-us-dollar-after-trump-announces-mexican-import-tariffs.htmlOil:
https://www.cnbc.com/2019/05/31/oil-market-us-tariffs-on-mexico-iranian-oil-sanctions-in-focus.htmlGold
https://www.cnbc.com/2019/05/31/gold-market-trump-mexico-tariffs-us-rate-cut-expectations-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/futures.ashx 
