U.S. stock futures edged down slightly on Friday amid renewed uncertainty around trade tariffs and stalled negotiations with China. Investors are also closely watching the upcoming release of the Federal Reserve’s preferred inflation gauge, while OPEC+ prepares to decide on oil production levels this weekend.
Trade Tariffs Back in Play
In a surprising twist, the U.S. Court of International Trade ruled earlier this week that former President Trump exceeded his authority with his tariff measures, ordering them to be reversed within 10 days. However, Trump quickly appealed the ruling, and the appellate court temporarily kept the tariffs in place as it reviews the case, delaying a final decision expected on June 5.
This ongoing legal tussle adds fresh uncertainty to the market, complicating corporate planning around hiring, investment, and interest rate moves. Trump criticized the trade court’s initial ruling but praised the appeals court for pausing it, signaling his administration’s intent to maintain tariffs by any legal means necessary.
U.S.-China Trade Talks Hit a Roadblock
Meanwhile, progress on U.S.-China trade relations appears stalled despite a temporary 90-day truce on tariffs agreed a few weeks ago. Treasury Secretary Scott Bessent acknowledged late Thursday that further negotiation breakthroughs might require direct intervention from President Trump and China’s leader Xi Jinping.
Given the complexity and stakes of the discussions, Bessent expressed optimism that a presidential call could help revive talks. The initial tariff reprieve had sparked a global stock rally, but deeper issues regarding China’s state-driven economic policies remain unresolved.
Market Futures Slip After a Strong Month
As May draws to a close, U.S. stock futures declined modestly: S&P 500 futures dipped 0.1%, Nasdaq futures fell 0.2%, and Dow futures dropped 0.2%. Despite this, the major indices have seen robust gains this month – the S&P 500 climbed over 6%, the Nasdaq surged 10%, and the Dow increased roughly 4%.
Attention now shifts to upcoming economic data, especially the April Personal Consumption Expenditures (PCE) inflation report, alongside earnings from companies like Gap, Ulta Beauty, and Dell Technologies.
Meanwhile, clothing retailer Gap (NYSE:GAP), cosmetics company Ulta Beauty (NASDAQ:ULTA) and tech giant Dell Technologies (NYSE:DELL) will be in focus after they released results after the close on Thursday.
PCE Inflation Data in Focus
Investors await the PCE price index, the Fed’s preferred inflation measure, for clues about the economy’s direction and the central bank’s future policy. The core PCE index, which excludes food and energy, is forecasted to rise 0.1% month-over-month in April, slightly higher than the prior month’s flat reading, translating to a 2.5% annual increase.
However, the data may show volatility due to the uncertain impact of the on-again, off-again tariff policies and how businesses adjust import costs. The Fed recently held short-term interest rates steady in the 4.25%-4.5% range as it monitors these developments.
Oil Prices Await OPEC+ Decision
Oil prices edged up on Friday but remain on track for a weekly decline amid ongoing concerns about trade tensions affecting global demand. Brent crude futures gained 0.2% to $63.50 per barrel, while U.S. West Texas Intermediate rose 0.3% to $61.15.
Both benchmarks are heading toward roughly a 1.5% loss this week, potentially marking a second consecutive weekly drop after tariffs took effect in early April. OPEC+ is meeting this weekend and is expected to approve another increase in oil production for July, following significant hikes agreed upon in recent meetings.