Wall Street initially slumped after President Donald Trump threatened 50% tariffs on EU imports starting June 1, citing stalled trade talks and calling the EU very difficult to deal with in a Truth Social post. Trump's threats led to renewed to trade concerns which had waned considerably in recent weeks after the U.S. reached trade deals with the U.K. and China.

Traders were also looking ahead to earnings news from Nvidia (NVDA), with the AI daring scheduled to release its fiscal first quarter results after the close of trading next Wednesday. The Commerce Department released a report showing new home sales in the U.S. in the month of April spiked compared to a significantly downwardly revised level in March.

Semiconductor stocks turned in some of the market's worst performances on the day, dragging the Philadelphia Semiconductor Index down by 1.5 percent. Networking stocks were notably weak , as reflected by the 1.0 percent loss posted by the NYSE Arca Networking Index. Retail, computer hardware and software stocks also moved downwards while gold stocks moved sharply higher along with the price of the precious metal.

Asia-Pacific stocks turned in a mixed performance. Japan's Nikkei 225 Index rose 0.5 percent, while China's Shanghai Composite Index slid by 0.9 percent. The major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index dipped by 0.2 percent, the German DAX Index slumped by 1.5 percent and the French CAC 40 Index tumbled by 1.7 percent.

In the bond market, treasuries extended the rebound seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4.4 bps to 4.50 percent.

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