The service sector, which accounts for about 70% of the U.S. economy, weakened due to the effects of tariffs, causing the three major stock indices in New York to decline.
On the 5th (Eastern Time), the Dow Jones Industrial Average closed down 61.90 points (0.14%) at 44,111.74 on the New York Stock Exchange (NYSE). The Standard and Poor's (S&P) 500 fell 30.75 points (0.49%) to close at 6,299.19, and the Nasdaq Composite fell 137.03 points (0.65%) to end at 29,916.55.
U.S. service sector performance showed weakness due to the impact of tariffs. The Institute for Supply Management (ISM) announced that the purchasing managers' index (PMI) for services in July recorded 50.1. Although it maintained an expansion trend, it slowed down by 0.7 points from June's 50.8.
In particular, among the PMI sub-indices, the prices index rose 2.4 points to 69.9 compared to the previous month, marking the highest level since 70.7 in October 2022. This indicates upward pressure on prices across the costs of raw materials and services.
So far, the New York stock market has maintained a strong trend thanks to the robust performance of the service sector despite the contraction in manufacturing PMI. However, as signs indicate that the service sector is also contracting, investor sentiment has sharply weakened.
Additionally, comments from President Donald Trump regarding tariffs on semiconductors and pharmaceuticals to be announced next week also had a negative impact. Trump noted, "Initially, a small tariff will be imposed on pharmaceuticals," adding, "However, within a year or at most a year and a half, it will increase to 150%, and thereafter to 250%."