Financial institutions on Wall Street remain steady amidst the customs argument
** Updated Trade Tensions and Stock Market Movement **
The ongoing trade dispute between the United States and China has maintained a steady hold on Wall Street as the week comes to a close. The legal battle over President Trump's powers and harsh accusations from the White House towards China have left the indices stagnant, with the Dow Jones, S&P 500, and Nasdaq Composite showing minimal movement on the last trading day of the week.
U.S. President Donald Trump continued his verbal attack on China concerning the trade war, accusing Beijing of violating the conditions of the recently agreed trade deal. This escalation further contributed to the indices' stagnation.
Economic uncertainty was also heightened by a federal appeals court decision that allows the Trump administration's tariffs to stand for the time being. The market's reaction was limited, as it had already expressed skepticism following a lower court's block on the tariffs. In addition, news of the appeals court's decision had already circulated during late trading on Thursday.
Despite these hurdles, the S&P 500 and the Dow Jones Index ended May with a gain for the first time since January, as optimism grows about a potential easing of global trade tensions. Specifically, the Dow Jones Index gained 0.1% to 42,270 points, with the S&P 500 closing virtually unchanged, and the Nasdaq Composite decreasing by 0.3%.
Personal income and spending data for April, along with the PCE price index, were released, showing a monthly rise in line with expectations but a year-over-year decrease. However, income rose more than anticipated, while spending increased at a slower pace than expected. The Chicago Purchasing Managers' Index unexpectedly softened in May, but the University of Michigan's consumer sentiment index for May came in slightly better than estimated.
Among individual stocks, Dell experienced a 2.1% decrease after initial gains, with the computer manufacturer raising its earnings targets for the first quarter. Meanwhile, Gap plummeted 20.2% due to the expectation of US tariffs significantly increasing its costs. American Eagle Outfitters slid into the red in the first quarter and withdrew its full-year guidance, causing a 2.0% stock drop. In contrast, Marvell Technology returned to profitability, benefiting from strong AI demand, but its stock fell 5.6% as its outlook was in line with expectations. Recent accusations by Trump against China may also impact the semiconductor company's stock.
Ulta Beauty's stock soared by 11.8 percent due to increased confidence this year, while Regeneron's stock plunged 19.1 percent following a disappointing drug trial result.
The dollar briefly recovered following the appeals court ruling but ultimately showed little change. Analysts at Bank of America suggest that U.S. tariffs are more detrimental to the U.S. economy and the dollar than to other countries and currencies due to the risk of retaliatory measures. Additionally, gold ended May with losses, breaking a four-month winning streak, and oil prices dipped initially following Trump's verbal attack on China but recovered later from steeper losses.
(Source: ntv.de, mau/DJ)
*It's worth noting that the current status of the U.S.-China trade dispute involves a mutual reduction in trade measures announced on May 12, 2025, with lowering U.S. tariffs from 145% to 30% and Chinese tariffs on U.S. goods from 125% to 10%. Furthermore, China agreed to modify its application of additional tariffs on U.S. goods, suspending part of the rates for an initial period of 90 days, and removing other non-tariff measures. These recent tariff reductions and strong tech earnings have potentially provided some stability for Wall Street amid ongoing trade tensions. *
- In the midst of escalating trade tensions and ongoing disputes, a potential economic and monetary union could offer a solution for stabilizing the global financial system by providing a common monetary policy and fostering greater economic integration among member states.
- Engaging in smart investment strategies during periods of economic instability, such as the current trade wars between major nations, requires a thorough understanding of the community policy responses and their potential impact on businesses, economic and monetary unions, and the overall financial market.
