Wall Street Wobbles Amid Recession and Tariff Fears/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks dipped Tuesday as the S&P 500 edged down from recent highs. Concerns over tariffs, debt, and a potential recession tempered optimism. Travel and retail stocks led losses while Home Depot offered a rare bright spot.
Stock Market Drift Quick Looks
- S&P 500 falls 0.3% after six straight gains.
- Dow slips 55 points; Nasdaq down 0.5%.
- Travel stocks slump amid consumer spending worries.
- Norwegian Cruise Line drops 3%, Carnival 2.8%.
- Home Depot rises 1.3% after strong revenue report.
- Tariff concerns and recession fears weigh on sentiment.
- Bond yields climb; 10-year Treasury at 4.50%.
- Moody’s warns U.S. credit rating at risk due to rising debt.
- China and Australia cut interest rates to spur growth.
- CATL shares jump 16% in major Hong Kong IPO.
Deep Look: Wall Street Slips as Tariff Concerns and Debt Outlook Weigh on Markets
NEW YORK, May 20, 2025 — U.S. stocks opened lower Tuesday, with the S&P 500 slipping 0.3% and flirting with its first daily decline in over a week. The market’s recent momentum—driven by resilience in consumer spending and hopes for tariff rollbacks—is now giving way to investor caution as economic headwinds resurface.
The Dow Jones Industrial Average shed 55 points, or 0.1%, while the Nasdaq composite dropped 0.5%, dragged down by weakness in tech and travel stocks.
Tariff Uncertainty, Rising Debt Fuel Investor Anxiety
Recent gains in the stock market have been partially fueled by optimism that President Donald Trump may backtrack on aggressive tariff policies—but so far, many remain in place. Wall Street remains uncertain about the economic fallout, particularly as Moody’s Ratings reaffirmed its downgrade of the U.S. credit outlook Monday, citing unsustainable federal debt and new fiscal risks.
The warning came as Washington debates further tax cuts, prompting fears that any future economic downturn might be harder to counteract with stimulus, given the already massive federal deficit.
“If the U.S. can’t offer as much fiscal support, the next recession could be deeper and longer,” warned James Egelhof, chief U.S. economist at BNP Paribas.
Bond Market Reacts as Treasury Yields Climb
The 10-year Treasury yield rose to 4.50% from 4.46%, indicating rising caution among bond investors. The 2-year yield, more closely linked to Federal Reserve expectations, inched up to 3.98%.
Though the U.S. economy has held up relatively well in 2025, investors fear that the current mix of tariffs, inflation concerns, and monetary tightening could eventually tip the country into recession.
Travel and Consumer Stocks Slide
Leading market losses were travel and leisure stocks, reflecting concern about how much Americans will spend on discretionary travel as inflation and borrowing costs remain high:
- Norwegian Cruise Line fell 3%
- Carnival slipped 2.8%
- MGM Resorts declined 1.6%
Home Depot Offers Some Relief
On the upside, Home Depot climbed 1.3% after reporting stronger-than-expected revenue, even though profits fell slightly short of Wall Street forecasts. The retailer reaffirmed its full-year outlook, signaling stability in the home improvement sector despite broader retail volatility.
This stood in contrast to other major brands warning about economic uncertainty and tariff-related pressure. Investors are now looking to Target and Lowe’s, which are expected to report earnings on Wednesday.
International Central Banks Cut Rates
Globally, markets reacted positively to new interest rate cuts aimed at stimulating demand:
- China’s central bank lowered its loan prime rate for the first time in seven months, with analysts predicting more cuts to come.
- The Reserve Bank of Australia cut its key interest rate to 3.85%, its second cut this year, declaring inflation within its target range.
Asian markets responded with enthusiasm. The Hang Seng Index in Hong Kong rose 1.5%, one of the strongest regional gains of the day.
Electric Vehicle Boom Drives IPO Excitement
One of the day’s biggest headlines came from China’s CATL, the world’s leading producer of electric vehicle batteries, which launched 2025’s largest IPO in Hong Kong. The company’s stock surged 16.4%, raising $4.6 billion.
Shares traded in Shenzhen also edged higher, closing up 1.2%.
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