Financial marketpowerhouses remain resilient amid ongoing trade disagreements
Wall Street Stalled Amid Ongoing U.S.-China Trade Dispute
Holding patterns have been the order of the day on Wall Street as the trade dispute between the United States and China persists, with stock markets braced for continued uncertainty. The latest exchange saw U.S. President Donald Trump accusing China of violating the trade agreement, casting a shadow over recent gains.
The verbal attack came on the final trading day of the week, during which the Dow Jones Index posted a minimal gain of 0.1%, closing at 42,270 points. The S&P 500 barely moved, while the Nasdaq Composite dipped by 0.3%. These indices had ended May with a gain for the first time since January, buoyed by optimism about potential trade tension easing.
Trump's accusations, however, have revived investors' concern over the ongoing trade spat. In a move that further heightened uncertainty, a federal appeals court upheld the administration's tariffs, allowing them to remain in place for now. The market's response was muted, as investors were already skeptical following a U.S. trade court blocking the tariffs, a decision that has since been overturned.
The mood was also dampened by the release of personal income and spending data for April, along with the PCE price index, a key measure of inflation for the U.S. Federal Reserve. The index remained steady, easing inflation fears, but rose less than expected and less sharply than in March on a year-over-year basis. Income, meanwhile, rose more than expected, while spending increased at a slower pace but in line with expectations.
In the retail sector, Gap plummeted 20.2% after announcing that U.S. tariffs would significantly increase its costs. American Eagle Outfitters slipped into the red in the first quarter and withdrew its annual guidance, with its stock down 2.0%.
Dell, on the other hand, fell 2.1% after initial gains, following its announcement of increased earnings guidance for the first quarter. However, Marvell Technology returned to profitability, benefiting from strong AI demand but experiencing a 5.6% stock drop due to recent trade-related accusations by Trump.
Ulta Beauty saw its stock surge 11.8 percent, while Regeneron's stock plunged 19.1 percent following a disappointing drug trial result.
The dollar showed little change after initially recovering on the appeals court ruling. According to analysts at Bank of America, U.S. tariffs are more negative for the U.S. economy and the dollar than for other countries and currencies. Bond yields dipped slightly, with the 10-year yield falling 4 basis points to 4.39 percent, while the gold price fell 0.8 percent, ending May with losses and snapping a four-month winning streak.
Oil prices initially dipped on Trump's verbal attack against China, but recovered later. Traders remained cautious, awaiting the outcome of the Opec+ meeting this weekend, which could decide on further voluntary production cuts for July.
Expert sentiment suggests that the risk of a recession has "come down meaningfully" if negotiations with China hold true, and the outlook for corporate earnings has brightened, especially with a weaker U.S. dollar. The S&P 500, in particular, is projected to reach 6,500 by the end of the year, a gain of about 12% from recent levels, though this is contingent on progress in trade talks.
[Source: ntv.de, mau/DJ]
- The ongoing U.S.-China trade dispute, characterized by its impact on Wall Street and businesses, has raised concerns about the Community Policy, Economic and Monetary Union, and the current monetary union, as investors weigh the implications on future economic stability.
- The volatile financial market, influenced by the trade dispute and its effects on various sectors such as retail and tech companies, places a spotlight on the need for transparency and predictability in international finance relations in order to foster long-term economic growth and certainty.
