The Jews were the followers of Musa, who used to refer to the Tawrah for Judgement.
Yahud – is a word that means, repenting, just is Musa said:
(انا هدنا اليك) “Certainly we have Hudna to you” meaning – we repent to you. This Indicates that they were first called Yahud, because they repented and because they were kind to each other.
It was also said: they were called Yahud in reference to Yahuda (Judah) the Eldest son of Ya’qub.
Abu ‘Amr bin Al-A’la said that they were called Yahud, because they were swayed when they read the Tawrah.