Stocks finish lower but notch strong monthly gain despite tariff worries

By Chibuike Oguh

NEW YORK (Reuters) -Global stocks finished down on Friday but notched a weekly gain and the biggest monthly increase since late 2023, despite markets having been roiled by uncertainty over the Trump administration's tariff policies.

Sentiments were initially buoyed at the start of the week by signs of easing trade tensions between the U.S. and Europe, after President Donald Trump delayed planned tariffs on imports from the EU. Investor focus then shifted to earnings of artificial intelligence chipmaker Nvidia, which reported better-than-expected results mid-week.

But markets were briefly shaken following an unexpected ruling by the U.S. Court of International Trade striking down Trump's so-called Liberation Day tariffs, triggering a court drama that saw an appellate court temporarily reinstate them.

Trump said on Friday that China had violated an agreement with the U.S. to mutually roll back tariffs and trade restrictions for critical minerals, and issued a new veiled threat to get tougher with Beijing.

"It's been quite a week," said Mark Malek, chief investment officer at Siebert.NXT. "Within four days we got a compressed version of what we've had for the entire month, which is the tug-of-war between forces that drove markets higher last year and the prior year - that being AI and technology growth stocks - and then this looming challenge we have with all these administration tariffs."

On Wall Street, the benchmark S&P 500 and Nasdaq finished lower, dragged down by weaknesses in technology, energy and consumer discretionary stocks. The Dow ended higher after erasing early losses.

All three indexes finished the week and the month higher, with the S&P 500 index and Nasdaq index registering their biggest monthly percentage gain since November 2023.

The Dow Jones Industrial Average rose 0.13% to 42,270.07, the S&P 500 fell 0.01% to 5,911.69 and the Nasdaq Composite fell 0.32% to 19,113.77.

European shares finished higher by 0.14%, notching a weekly gain and adding 4% for the month of May. MSCI's broadest index of Asia-Pacific shares outside Japan closed up 0.74% overnight, ending the week lower but gaining nearly 5% for the month - making it the biggest monthly gain since September 2024.

MSCI's main world index ended down 0.07% to 879.63, but gained 1.32% for the week and 5.53% in May - the biggest monthly gain since November 2023.

"We would have thought prior to this week that markets were becoming numb to this discussion of tariffs and a lot it has been factored in, but apparently that's not the case," Malek added.

Data showed on Friday that U.S. consumers increased their spending marginally in April, and the closely watched Personal Consumption Expenditures Price Index rose 0.1% last month, in line with expectations.

Trump and Fed Chair Jerome Powell had their first face-to-face meeting on Thursday.

"Powell did not discuss his expectations for monetary policy except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook," a Fed statement said afterwards. 

The yield on benchmark U.S. 10-year notes fell 2.6 basis points to 4.398%. The 30-year bond yield rose 0.2 basis points to 4.9254% after reversing earlier losses.

The dollar was higher against major peers including the euro and on track for a monthly gain against the Japanese yen. The dollar weakened 0.15% to 143.95 against the yen, while the euro was down 0.12% at $1.135050.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.14% to 99.394. It was on track for a fifth straight month of losses, weighed down by tariff uncertainty.

Oil prices settled down, as investors weigh a potentially larger OPEC+ output hike for July.

Brent crude futures settled down 0.39% at $63.90 a barrel. U.S. West Texas Intermediate crude finished down 0.25% at $60.79 a barrel.

Gold prices slipped as the dollar edged higher. Spot gold fell 0.7% to $3,292.78 an ounce. U.S. gold futures settled 0.9% lower at $3,315.40.

(Reporting by Chibuike Oguh in New York; Additional reporting by Kevin Buckland in Tokyo; editing by Gareth Jones, Sandra Maler and Nia Williams)