US stocks pulled back on Monday after China added fuel to simmering trade tensions with the US, setting investors on guard as they turned the page on a bullish May.
The Dow Jones Industrial Average (^DJI) fell around 0.4%, or around 170 points. The S&P 500 (^GSPC) declined nearly 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) ticked lower by about 0.2%.
China hit back at President Trump’s claim that it has violated the Geneva tariff truce on Monday, blaming the US instead for failing to keep up its end of the deal. The mutual finger-pointing has undermined hopes for a revival of trade talks between the two top economies and stoked lingering trade uncertainty.
The escalation comes after Trump ratcheted up pressure on Friday with a threat to double US tariffs on imported steel and aluminum to 50% from 25%. While a federal court last week struck down significant portions of Trump’s duties, easing market fears, a higher court temporarily reinstated the duties a day later to allow legal proceedings to continue.
The US dollar (DX-Y.NYB) fell as markets assessed trade-war risks, with rising inflation and slowing growth in particular focus. Meanwhile, gold (GC=F) futures rose amid demand for safer assets, as Ukraine’s dramatic drone strikes on Russia on Sunday added geopolitical worries to trade fears.
In US stocks, the tepid start to June follows a standout May: The S&P 500 (^GSPC) rallied more than 6% in its best month since November 2023 and best May since 1990.
Against this backdrop, all eyes now turn to a critical slate of economic data this week — most notably the May nonfarm payrolls report due Friday, which will offer fresh clues on how trade frictions and interest rate expectations are shaping the broader US economy. May updates on US factory activity from S&P Global and ISM are on the docket on Monday.
Any tariff-spurred rise in inflation is likely to be temporary, and that means the Federal Reserve will be able to make “good news” interest-rate cuts in 2025, Fed governor Christopher Waller said on Monday. Wall Street is waiting to hear whether Fed Chair Jerome Powell and other officials echo that view in their own speeches later in the day.
Earnings season is almost wrapped, with results from CrowdStrike (CRWD), Broadcom (AVGO), DocuSign (DOCU), and Lululemon (LULU) the main points of interest in a smaller week of reports.
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