Investing.com - U.S. stocks ended the month on a sour note Friday with a selloff led by a slump in trade-sensitive stocks after President Donald Trump unexpectedly threatened escalating tariffs on Mexico over illegal immigration.
The S&P 500 lost 1.32%, while the Nasdaq Composite fell 1.51% and the Dow Jones Industrial Average slumped 1.41%. The major indexes ended with monthly losses for the first time this year. The S&P 500 lost 6.58% in May, with the Nasdaq down 7.9% and the Dow down 6.69%.
In a tweet, Trump said the U.S. will impose, starting June 10, a 5% tariff on all imported goods from Mexico that would "gradually increase until the illegal immigration problem is remedied."
Analysts said the reaction in the global markets suggest that investors fear the threat from Trump will hurt stocks and global growth.
"Evidently, the market is implying additional second-order effects," Citi said, such as further tariffs, a depreciation in asset quality and slowing growth.
Corners of the market sensitive to proposed levies on Mexico, such as automakers, transports and apparel companies, fell sharply amid concerns that margins could take a hit from increases in input costs.
"Margins are so thin in the U.S. market right now that there's no way that any automaker is not going to pass on these tariffs to their customers," said analyst Janet Lewis at Macquarie Securities.
Ford Motor (NYSE:F) fell 2.26%, General Motors (NYSE:GM) lost 4.25% and Fiat Chrysler (NYSE:FCAU) slipped 5.8%.
In what has proved a horrid week for apparel retailers amid slew of disappointing quarterly reports, Gap (NYSE:GPS) plunged 9.2% after cutting its profit forecast. The SPDR S&P Retail ETF (NYSE:XRT) fell 3.9% on the week.
Energy stocks also contributed to the broader decline in the market as oil prices settled 5.5% lower on fears that profit margins at American oil refineries, heavily reliant on Mexico's heavy crude grades, could come under pressure.
On the earnings front, Williams-Sonoma (NYSE:WSM) surged 13.4% after reporting better-than-expected first-quarter results. Okta (NASDAQ:OKTA) (OKTA) gained 6.6% as it delivered a narrower-than-expected quarterly loss.
In sign of risk aversion, real estate and utilities, defensive sectors of the economy, ended the day higher.
On the economic front, in-line inflation data and better-than-expected personal spending data did little to improve sentiment on stocks.
The S&P 500 and Nasdaq suffered their fourth straight weekly losses. The S&P dropped 2.6% with the Nasdaq down 2.4% The Dow's 3% loss was its sixth in a row and seventh loss in the last eight weeks.
Top S&P 500 Gainers and Losers Today:
Cooper Companies (NYSE:COO), DISH Network (NASDAQ:DISH) and Dollar Tree (NASDAQ:DLTR) were among the top S&P 500 gainers for the session.
Gap (NYSE:GPS), Sysco (NYSE:SYY) and Mattel (NASDAQ:MAT) were among the worst S&P 500 performers of the session.