US STOCKS-Wall St set to drop after Trump threatens EU, Apple with fresh tariffs

By Shashwat Chauhan and Kanchana Chakravarty

May 23 (Reuters) - Wall Street was on track for sharp losses on Friday after U.S. President Donald Trump recommended 50% tariffs on the European Union, while Apple slid after he warned the company would have to pay tariffs if its phones were not made in the United States.

"The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump said in a post on Truth Social.

He also said in a separate post before this that Apple AAPL.O would be subject to 25% tariffs if iPhones sold in the U.S. were not made within its borders.

Apple's shares were down almost 3.3% in premarket trading.

"The impact of tariffs for both sides on the surface is jolting... the market doesn't like uncertainty," said Andre Bakhos, managing member at Ingenium Analytics LLC.

"In the end, it will help the U.S. and other countries if we can get the EU at the table."

At 08:42 a.m. ET, Dow E-minis YMcv1 were down 497 points, or 1.19%, S&P 500 E-minis EScv1 were down 79.75 points, or 1.36%, and Nasdaq 100 E-minis NQcv1 were down 371 points, or 1.75%.

Wall Street's "fear gauge", the CBOE Volatility Index .VIX, spiked to a more than two-week high and was last at 24.6 points.

Most megacap and growth stocks dropped, with Amazon AMZN.O and Nvidia NVDA.O sliding about 3% each.

Chip stocks including Advanced Micro Devices AMD.O and Intel INTC.O, along with airline operators such as American Airlines AAL.O, were among the worst hit, also falling about 2% each.

Sportswear giant Nike NKE.N dropped 3.1% and electronics retailer Best Buy BBY.N dipped 4.3%.

Deckers Outdoor DECK.N slumped nearly 20% after the maker of UGG boots forecast first-quarter net sales below estimates and said that due to tariff-led macroeconomic uncertainty, it would not be providing annual targets.

All three main stock indexes were set for sharp weekly losses as worries about mounting debt pushed Treasury yields higher. Moody's downgrade of the U.S. credit rating late last week had initially sparked concerns.

The Republican-controlled U.S. House of Representatives passed the sweeping tax and spending bill that would enact much of Trump's policy agenda by a narrow margin on Thursday. The bill now heads to the Senate, which the GOP controls by 53-47, for approval.

If it becomes a law, it will add about $3.8 trillion to the federal government's $36.2 trillion debt in the next decade, according to the nonpartisan Congressional Budget Office.

Long-dated government bond yields eased further as investors moved to safer assets, with those on the 10-year note US10YT=RR off 6.6 basis points to 4.48%.

On the brighter side, Intuit INTU.O advanced 7.2% after the tax-preparation software provider forecast fourth-quarter revenue and profit above estimates.

Trading activity is expected to thin on Friday, heading into a long weekend, as markets will be shut on Monday for Memorial Day.