By Chibuike Oguh
NEW YORK (Reuters) – Stocks finished lower on Wall Street but edged higher in Europe on Friday amid uncertainty about U.S. President Donald Trump’s rapid policy initiatives, including spending cuts and tariffs, and Germany’s upcoming elections. Oil prices settled down more than 2% while gold eased from record highs.
Trump has announced tariffs on several major U.S. trading partners since returning to the White House last month and unleashed a campaign to slash the 2.3 million-strong federal workforce.
“The sell-off in the last couple of days has really been about the uncertainty with the pace of change in the government,” said Joshua Wein, portfolio manager at Hennessy Funds. “We all knew there would be spending cuts and layoffs of employees, but the pace at which that is happening has given the market a new type of uncertainty that we haven’t seen before.”
Data released on Friday showed U.S. business activity tumbled to a 17-month low, indicating that businesses and consumers were becoming increasingly rattled by the Trump administration’s policies.
The benchmark S&P 500, Dow Jones Industrial Average and Nasdaq Composite Index ended down driven by on losses in industrials, consumer discretionary, technology and energy stocks. The three main indexes also finished the week lower.
In Europe, shares have been volatile this week ahead of Germany’s election on Sunday. Europe’s broad Stoxx 600 climbed 0.52%, reversing two days of declines. It ended the week up 0.26%.
The Dow dropped 1.69% to 43,428.02, the S&P 500 fell 1.71% to 6,013.13 and the Nasdaq Composite slid 2.20% to 19,524.01.
MSCI’s gauge of stocks across the globe fell 1.03% to 874/59. The index is down 1.09% for the week. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 1.35% to its highest since November 8 and gained 1.47% for the week.
Several Federal Reserve officials, including Fed Governor Adriana Kugler and Atlanta Fed President Raphael Bostic, signaled on Thursday they still feel that cooling U.S. inflation will in time allow the central bank to deliver further interest rate cuts.
The benchmark U.S. 10-year note yield fell 7.2 basis points to 4.427%.
“Ultimately, if you weigh what’s been happening in the last few days, the equity market is pricing in more cuts than the bond market is,” Wein said. “I think short term, it’s this uncertainty but long term, it’s the potential for tax cuts, cuts in regulation and free market forces at work as it pertains to whatever people care about in the economy.”
The dollar advanced against major currencies, partly retracing losses versus the Japanese yen. The euro stumbled after a series of business activity surveys showed a sharp contraction in early February in France and only mild improvement in Germany.
The yen strengthened 0.31% to 149.14 per dollar. Against the Swiss franc, the dollar strengthened 0.07% to 0.897.
The dollar index, which measures the greenback against a basket of currencies including the yen and euro, rose 0.25% to 106.62, with the euro down 0.38% at $1.046.
Oil prices settled down more than 2% on supply disruptions in Russia, fading Middle East risk premium, while uncertainty loomed over a potential peace deal in Ukraine.
Brent futures settled down 2.68% to $74.43 a barrel, while U.S. West Texas Intermediate crude settled down 2.87% to $70.40.
Gold prices eased as investors booked profits from the previous session’s record high. Spot gold fell 0.16% to $2,934.10 an ounce. U.S. gold futures settled 0.1% lower at $2,953.20.
(Reporting by Chibuike Oguh in New York and Alun John in London; Editing by Richard Chang and Will Dunham)
