Volkswacht Bodensee - US stocks tumble on fears of slowdown

Major US indices spent the entire day in the red before closing about two percent lower after economic data added to worries about the outlook of the US economy as President Donald Trump presses on with tariffs and government job cuts that could boost unemployment.

"You are starting to see some disappointment in the economic data," said Tom Cahill of Ventura Wealth Management, who tied Friday's big drop in the 10-year US Treasury note yield to economic worries.

On Friday, an S&P Global reading on US services industry activity fell to a 25-month low, while a University of Michigan survey of consumer sentiment tumbled nearly 10 percent from January.

LBBW's Karl Haeling said both are considered "secondary" economic reports, but they corroborate other major data points on employment and retail sales that have also pointed to weakness.

"Investors ever since the election have been very bullish," he said, but the market may be at an inflection point due to "all the uncertainty coming from Trump."

The trading day started off with gains in Asian equities, with Shanghai rising and Hong Kong piling on four percent to hit a three-year high fueled by tech firms.

China's Alibaba rocketed more than 14 percent following its forecast-busting earnings figures the previous day. The firm has bounced nearly 70 percent higher since the turn of the year.

Other household names pushed the Hang Seng Index higher, with Tencent adding more than six percent, and JD.com and XD Inc gaining more than five percent.

China's tech sector has been on a roll this year, and has been given an extra boost since startup DeepSeek unveiled a chatbot that upended the global AI sector.

Frankfurt stocks dipped and the euro retreated against the dollar ahead of the German election on Sunday, with investors expecting a more expansionary fiscal policy from Berlin to revive Europe's largest economy.

"The election comes against a difficult backdrop for Germany right now, as their economy has just experienced two consecutive annual contractions over 2023 and 2024," said Deutsche Bank's Jim Reid.

In Tokyo, the yen retreated for most of the day after Japanese Finance Minister Katsunobu Kato said Friday that rising government bond yields -- which are at their highest since 1999 -- could weigh on economic growth.

That dented expectations the Bank of Japan would announce a series of rate hikes this year, even as data showed Japanese core inflation hit a 19-month high.

Crude prices fell by around three percent as traders expect the US to ease the sanctions that have limited Russian oil exports, leading to greater supply.

"It is now clear that it is only a matter of time before Trump lifts sanctions against Russia," said Arne Lohmann Rasmussen, chief analyst with Global Risk Management.

"Although the EU is unlikely to follow suit, such a decision would enable increased Russian exports -– particularly to refineries in China and India," he added.

- Key figures around 2150 GMT -

New York - Dow: DOWN 1.7 percent at 43,428.02 (close)

New York - S&P 500: DOWN 1.7 percent at 6,013.13 (close)

New York - Nasdaq Composite: DOWN 2.2 percent at 19,524.01 (close)

London - FTSE 100: FLAT at 8,659.37 (close)

Paris - CAC 40: UP 0.4 percent at 8,154.51 (close)

Frankfurt - DAX: DOWN 0.1 percent at 22,287.56 (close)

Tokyo - Nikkei 225: UP 0.3 percent at 38,776.94 (close)

Hong Kong - Hang Seng Index: UP 4.0 percent at 23,477.92 (close)

Shanghai - Composite: UP 0.9 percent at 3,379.11 (close)

Euro/dollar: DOWN at $1.0462 from $1.0501 on Thursday

Pound/dollar: DOWN at $1.2628 from $1.2670

Dollar/yen: DOWN at 149.32 from 149.64 yen

Euro/pound: DOWN at 82.81 pence from 82.89 pence

West Texas Intermediate: DOWN 3.0 percent at $70.40 per barrel

Brent North Sea Crude: DOWN 2.7 percent at $74.43 per barrel

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