U.S. stock indices opened the week on a mixed note as renewed tensions between China and the U.S. reignited concerns of a potential trade war between the two largest global economies.
At 09:32 ET (13:32 GMT), the Dow Jones Industrial Average fell 170 points (0.4%), the S&P 500 dropped 11 points (0.2%), while the Nasdaq 100 edged up by 25 points (0.1%). Wall Street is handing back some of last month’s gains as a result of heightened trade concerns.
The S&P 500 ended May with a gain of over 6%, its best monthly performance since November 2023. The Nasdaq Composite rose by more than 9%, and the Dow Jones Industrial Average posted a 4% increase during the same period.
China Pushes Back Against U.S. Trade Accusations
China responded strongly to U.S. accusations that it violated agreements made during Geneva trade talks. The Chinese commerce ministry labeled the claims as “groundless” and pledged to take firm measures to protect its interests.
These developments followed remarks from U.S. President Donald Trump on Friday, asserting that China had breached a bilateral deal to roll back tariffs. Tensions escalated further as the U.S. Treasury Secretary noted last week that trade talks with Beijing had stalled.
In mid-May, the U.S. and China agreed to pause significant tariffs for 90 days and ease restrictions on critical exports needed for various industries. However, on Friday, Trump announced plans to increase tariffs on steel imports from 25% to 50%, effective June 4.
Commerce Secretary Howard Lutnick reinforced over the weekend that these tariffs would remain in place despite legal challenges. Although a federal trade court temporarily blocked much of Trump’s tariff agenda, an appeals court quickly reinstated them.
Key Economic Indicators Awaited
Monday brings several important economic cues, including PMI data from the Institute for Supply Management (ISM). Federal Reserve Chair Jerome Powell is set to speak at a conference in Washington, D.C., with markets looking for insights into the U.S. economic outlook.
Investors are also awaiting the May nonfarm payrolls report, which is expected to show a slowdown in job creation, with 130,000 jobs added compared to 177,000 in April.
Federal Reserve Governor Christopher Waller stated on Monday that recent data supports the possibility of rate cuts later this year. He expressed confidence that inflationary pressures from tariffs would not be long-lasting, enabling the Fed to consider easing monetary policy.
Market Movements
In the corporate sector, semiconductor stocks fell on reports that the U.S. government may tighten restrictions on China’s tech sector. Companies such as Nvidia, Marvell, and Taiwan Semiconductor saw declines amid speculation about expanded regulations targeting subsidiaries of sanctioned firms.
Conversely, shares of U.S. aluminum and steel producers surged, buoyed by the announcement of increased tariffs. Companies like Cleveland-Cliffs, Nucor, and Steel Dynamics saw gains in premarket trading.
Oil Prices Rally
Crude oil prices climbed on Monday following an OPEC+ decision to maintain its steady production increase. Brent futures rose by 3.1% to $64.69 per barrel, while U.S. West Texas Intermediate crude gained 3.4% to $62.86 per barrel.
The decision to raise output by 411,000 barrels per day in July marked the third consecutive month of such increases, alleviating concerns of a larger production hike as the group seeks to balance market dynamics.