U.S. equity markets faced significant headwinds last week, primarily due to escalating trade tensions and rising Treasury yields.
Major Index Performance:
Key Drivers
Markets came under pressure last week as the 10-year U.S. Treasury yield surged to 4.51%, its highest level since 2023. This move reignited concerns over persistent inflation and tighter financial conditions, weighing on rate-sensitive sectors and high-valuation tech stocks.
At the same time, politically charged tariff threats — including a proposed 50% duty on EU imports and 25% on foreign smartphones — reintroduced geopolitical risk into markets. These floated measures, though not yet enacted, added uncertainty at a time when investors are already questioning policy direction.
Adding to the tension, Moody’s downgraded the U.S. credit rating, citing fiscal instability. The downgrade, paired with rising yields, reinforced fears of longer-term structural imbalances and increased sovereign risk.
Technology stocks underperformed sharply, with Apple losing over 6% amid direct tariff exposure. A broader move into cash and short-duration assets highlighted the market's shift toward capital preservation in a more volatile and policy-sensitive
environment.
What to watch for next week
Investors will be closely monitoring several key events and data releases that could influence market direction:
Economic Indicators:
Corporate Earnings:
The past week's market performance underscores the sensitivity of equities to geopolitical developments and monetary policy signals. As investors navigate these uncertainties, attention will remain focused on inflation data, corporate earnings, and trade policy decisions that could shape market trajectories in the near term.
