Wall Street slips mid-session as trade tensions deepen; Nasdaq falls nearly 170 points, Europe ends flat

Markets are also digesting news that the administration may invoke the Trade Act of 1974 to push through tariffs of up to 15% for 150 days, bypassing current legal barriers.

US equities slipped further into negative territory midday Friday, capping off what has been a volatile but strong month for markets.

As of mid-session, the Dow Jones Industrial Average was down 92.80 points to 42,122.93, a 0.22% decline. The Nasdaq Composite fell sharply by 169.85 points, or 0.89%, to 19,006.02, while the S&P 500 slid 31.96 points, or 0.54%, to 5,880.21.

The pullback comes after President Donald Trump escalated tensions with China, accusing Beijing of violating their preliminary trade agreement. His remarks revived fears of a prolonged trade war just as legal wrangling over his tariff policy continues. The Court of International Trade blocked a broad tariff measure late Wednesday, only for an appeals court to grant a temporary stay on Thursday, allowing duties to stand until next week.

Markets are also digesting news that the administration may invoke the Trade Act of 1974 to push through tariffs of up to 15% for 150 days, bypassing current legal barriers.

In Europe, equities closed slightly higher, steadying after two days of declines. The Stoxx 600 index ended 0.1% higher, as gains in financials and select industrials offset weakness in consumer and healthcare names. Shares of M&G surged 5% after Japan’s Dai-ichi Life acquired a 15% stake as part of a strategic partnership.

Despite the uptick, European markets remained on edge amid the global trade turbulence and speculation about impending U.S. tax reforms affecting foreign capital flows.

Looking ahead, investors are eyeing a busy week in Europe, with upcoming euro zone inflation data, a crucial European Central Bank meeting, and the SuperReturn private equity summit in Berlin — all of which could set the tone for June.

Back in the U.S., the broader indexes remain on track to end May with solid gains. The S&P 500 is still up over 5% for the month, the Nasdaq Composite has advanced 9.5%, and the Dow has gained around 3%, despite today's pullback.

Later today, markets will also assess the latest PCE inflation data — the Federal Reserve’s preferred gauge — which could influence expectations around interest rates heading into the summer.