(NEW YORK) — Stocks slumped at the open of trading on Monday after a downgrade of U.S. credit triggered a spike in debt yields that threatened to raise borrowing costs throughout the nation’s economy.
The Dow Jones Industrial Average dropped 295 points, or 0.7%, while the S&P 500 fell 0.9%. The tech-heavy Nasdaq plunged 1.2%.
Moody’s, a top ratings agency, cut the U.S. credit rating on Friday, dropping it one notch from the top rating of Aaa to a lower classification of Aa1.
The credit downgrade unleashed a selloff of U.S. debt, sending Treasury yields higher, which in turn raised the cost of U.S. borrowing and stoked investor fears about wider impact across the economy.
“This is a major symbolic move as Moody’s were the last of the major rating agencies to have the U.S. at the top rating,” a Deutsche Bank analyst said in a client note shared with ABC News.
The Treasury selloff sent long-term yields soaring above the level attained in the immediate aftermath of President Donald Trump’s “Liberation Day” tariffs. That spike in yields helped persuade Trump to suspend a major swathe of the tariffs, Trump later said.
The current spike in debt yields coincides with U.S. House Republicans’ push to pass a domestic policy bill that includes broad tax cuts. The nonpartisan Congressional Budget Office warned last month that the bill would raise the nation’s debt, which now stands at about $36 trillion.
(NEW YORK) — Alphabet’s Google illegally dominated two markets for online advertising technology, according to a federal judge.
Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia said in a ruling Thursday that Google had broken the law to build its dominance over the largely invisible system of technology that places advertisements on pages across the web.
“Plaintiffs have proven that Google has willfully engaged in a series of anticompetitive acts to acquire and maintain monopoly power in the publisher ad server and ad exchange markets for open-web display advertising,” the judge wrote in his ruling. “For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets.”
The Department of Justice had sued Alphabet claiming Google had a monopoly in ad technology that allowed the company to charge higher prices and take a bigger portion of each sale. The Justice Department has said Google should have to sell off at least its Google Ad Manager, which includes the company’s publisher ad server and its ad exchange.
“We won half of this case and we will appeal the other half,” Lee-Anne Mulholland, Google’s vice president for regulatory affairs, said in a statement. “The Court found that our advertiser tools and our acquisitions, such as DoubleClick, don’t harm competition. We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
ABC News has reached out to Alphabet for comment.
Google is now facing the possibility of two different U.S. courts ordering it to sell assets or change its business practices. A trial will be held this April in Washington on the DOJ’s request to make Google sell its Chrome browser and take other measures to end its dominance in online search.
This is a developing story. Please check back for updates.
Marcus Wells, a barista at Float Coffee in Hollywood, Calif., speaks, April 8, 2025, about the impact the global tariff war will have on his business. KABC
(NEW YORK) — Americans’ love affair with coffee and chocolate could soon get a lot more expensive.
Baristas and confectioners say the beans they need to make their products are mostly grown in countries targeted by the Trump administration’s tariffs.
According to the U.S. Department of Agriculture, the United States is the world’s second-largest importer of coffee. In a reflection of how much Americans love chocolate, U.S. businesses import about $5 billion worth of cocoa beans a year, according to the USDA.
Some owners of small businesses dealing in coffee and confections say they fear the tariffs imposed by President Donald Trump will leave them with no choice but to pass the added costs on to their customers.
“So while the tariffs are being imposed to try to up the production of goods in the United States, that’s a good we just simply cannot make in the United States,” Marcus Wells, a barista at Float Coffee in Hollywood, California, told ABC Los Angeles Station KABC of the coffee beans he imports from Central and South American countries that are currently are under a 10% baseline tariff imposed by the Trump administration.
Trump announced on Wednesday that he was pausing reciprocal tariffs on most countries for 90 days, except China.
Wells said the baseline tariff of 10% will likely translate to a 10% increase in a cup of coffee at his shop.
“We’re always looking for ways to maintain customers and it’s hard to do that when you’re constantly having to raise prices in order to keep your business open,” Wells said.
Cason Crane, CEO of Explorer Cold Brew, a company that sells bottled and canned coffee at stores across the nation, told ABC News that he hopes the 90-day pause will allow enough time for countries to negotiate deals with the White House to stave off the higher reciprocal tariffs.
“Coffee has actually been exempt from tariffs in the United States since the 1800s. So, my hope is that, with this 90-day pause, while it’s not ideal to still have 10% tariffs, that the administration can negotiate some more targeted deals that recognize things like the United States cannot grow coffee outside of Hawaii or Puerto Rico, which account for half a percent of worldwide coffee production,” Crane said.
Before Trump put a pause on reciprocal tariffs on Wednesday, Bill Ackman, the billionaire CEO of the hedge fund Pershing Square Capital Management and a supporter of Trump, posted a lengthy message on social media, saying, “If the president doesn’t pause the effects of the tariffs soon, many small businesses will go bankrupt.”
In his post, Ackman shared an email he received from Crane, whose company he has invested in. In the email, Crane said the price of glass bottles he sources from China for his coffee will go up 50%, while chai sourced from India will increase by 26% and coffee imported from Ethiopia, Peru and Canada will climb by 10%.
“Will my clients tolerate a near doubling of their contract costs overnight, or will they expect me to absorb the increases my vendors are already threatening?” Crane wrote in the email. “If clients resist price hikes and my employees demand higher wages to offset their rising cost of living, we end up in a lose-lose scenario — no spending and no jobs.”
On Thursday, Crane told ABC News that he likely won’t be able to raise prices.
“Small businesses have way fewer options than big businesses. We don’t really have the capability to raise our prices,” Crane said. “Think about going to a farmers market; you’re already paying a little bit more. So, we’re already priced at the top range and we don’t really have the power to negotiate with our suppliers like the big businesses do. So the best I can do is keep holding on and hope for a better policy, and urge people to look out for those small businesses.”
New Hampshire chocolatier Richard Tango-Lowy, owner of Dancing Lion Chocolate in Manchester, said he imports some of his cocoa beans from Vietnam, which Trump says faces a 46% reciprocal tariff if it doesn’t bargain with the White House. Tango-Lowy said he also gets beans from Bolivia, which is subject to the baseline 10% tariff.
“We have about 600 kilos of beans on the way from Bolivia. We have no idea what they will cost right now,” Tango-Lowy told ABC affiliate station WMUR in Manchester.
Tango-Lowy said much of his packaging comes from Hong Kong, which is subject to China’s tariffs.
“We work domestically where we can, but a lot of what we do is not available domestically,” Tango-Lowy said. “It just doesn’t exist.”
Tango-Lowy is bracing to have to absorb the tariffs, saying, “We’re going to need the beans at some point.”
As food and beverage companies contemplate if they will or can’t cover the tariffs without raising prices on customers, Andrew Sinclair, owner of Mad Lab Coffee in Los Angeles, said his prices will stay the same.
“If you had to pay $9 for a cup of coffee I probably wouldn’t see you every day, and I like seeing people every day,” Sinclair told KABC. “So we’re going to keep our prices the same.”
Sinclair said he trusts his longstanding partnerships with growers in Colombia and Ethiopia will help him weather the economic turmoil.
“If you can afford a good cup of coffee, go to your local coffee shop and grab a good cup of coffee,” Sinclair said. “And if you can’t afford it, please don’t buy a cup of coffee and end up not being able to pay your rent. That’s just not responsible.”
(WASHINGTON) — The U.S. Consumer Price Index released on Wednesday showed May inflation ticking slightly higher, rising 2.4%, in line with expectations.
The report amounted to the latest test for President Donald Trump’s tariffs as some retailers and economists warn the policy will raise prices.
So far, the economy has defied fears of price hikes, instead giving way to a cooldown of inflation over the months since Trump took office.
Economists expect inflation to have jumped slightly in May, registering year-over-year price increases of 2.4%. That would mark an increase from an inflation rate of 2.3% over the year ending in April, which amounted to the lowest inflation level since 2021.
The small increase in inflation anticipated by economists would keep price levels near the Federal Reserve’s target rate of 2%, putting them well below a recent peak of 9% in 2022. In recent weeks, Trump has dialed back some of his steepest tariffs, easing the costs imposed upon importers. Such companies typically pass along a share of the higher tax burden in the form of price hikes.
A trade agreement between the U.S. and China in May slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a downturn.
The U.S.-China accord came weeks after the White House paused a large swath of Trump’s “Liberation Day” tariffs targeting dozens of countries. Trump also eased sector-specific tariffs targeting autos and rolled back duties on some goods from Mexico and Canada.
Still, an across-the-board 10% tariff applies to nearly all imports, except for semiconductors, pharmaceuticals and some other items. Those tariffs stand in legal limbo, however, after a pair of federal court rulings late last month.
Tariffs remain in place for steel, aluminum and autos, as well as some goods from Canada and Mexico.
Warning signs point to the possibility of elevated prices over the coming months.
Nationwide retailers like Walmart and Best Buy have voiced alarm about the possibility they may raise prices as a result of the levies.
The Organization for Economic Co-operation and Development, or OECD, said this month it expects U.S. inflation to reach 4% by the end of 2025, which would mark a sharp increase from current levels.
Federal Chair Jerome Powell, in recent months, has warned about the possibility that tariffs may cause what economists call “stagflation,” which is when inflation rises and the economy slows.
Stagflation could put the central bank in a difficult position. If the Fed were to raise interest rates, it could help ease inflation, but it may risk an economic downturn. If the Fed were to cut rates in an effort to spur economic growth, the move could unleash faster price increases.
For now, the Fed appears willing to take a wait-and-see approach. At its last meeting, in May, the Fed opted to hold interest rates steady for the second consecutive time.
“For now, it does seem like a fairly clear decision for us to wait and see,” Powell said at a press conference in Washington, D.C., last month.
The Fed will announce its next rate decision on June 18. Investors peg the chances of a decision to leave rates unchanged at 99.9%, according to the CME FedWatch Tool, a measure of market sentiment.
