Financial sector maintains stance amidst intensifying trade tariff dispute
Wall Street Remains Stagnant Amid Escalating Trade Dispute Between US and China
The ongoing trade policies of President Donald Trump continue to stir up uncertainty on Wall Street, with the legal battle over his powers and harsh accusations against China leaving the indices motionless as the week comes to a close.
On the last trading day of the week, indices on Wall Street showed little movement, with the trade dispute remaining the main focus. President Trump verbally attacked China in the trade dispute, accusing it of violating the conditions of the recently agreed trade deal.
The mood was also affected by a federal appeals court decision that allowed the Trump administration's tariffs to remain in place for now. The negative reaction was limited as the market had already started to skepticism after the U.S. trade court blocked the tariffs, a decision later overturned by the appeals court. Furthermore, the news of the appeals court's ruling had already been disseminated during late trading on Thursday.
The Dow Jones Industrial Average gained 0.1% to 42,270 points, while the S&P 500 closed virtually unchanged. The Nasdaq Composite fell by 0.3%. The S&P 500 and the Dow Jones Industrial Average ended the month of May with a gain for the first time since January, with optimism about a possible easing of global trade tensions growing, analysts said.
Among individual stocks, Dell fell 2.1% after initial gains, following the computer manufacturer's raised earnings guidance for the first quarter. In the apparel sector, Gap plummeted 20.2% as the company anticipates U.S. tariffs to significantly increase its costs. American Eagle Outfitters slipped into the red in the first quarter and withdrew its annual guidance, with its stock falling 2.0%.
On the other hand, Marvell Technology returned to profitability, benefiting from strong AI demand, but its stock fell 5.6% due to its outlook being in line with expectations, and recent accusations by Trump against China are likely to weigh on its stock. Beauty giant Ulta Beauty is feeling more confident this year, sending its stock up 11.8 percent, while a disappointing drug trial result pushed Regeneron’s stock down 19.1 percent.
The dollar briefly recovered after the federal appeals court ruling, but ultimately showed little change. Analysts at Bank of America noted that U.S. tariffs are more negative for the U.S. economy and the dollar compared to other countries and currencies, as they carry the risk of retaliatory measures.
In addition, yields dipped slightly, with the 10-year yield falling 4 basis points to 4.39 percent, as signs of easing inflation emerged and a firmer dollar weighed on the gold price, which fell 0.8 percent to $3,294 an ounce, ending a four-month winning streak.
Oil prices initially dipped due to Trump's verbal attack on China but recovered later. Brent and WTI prices fell as much as 0.4 percent, and the market awaited the outcome of the OPEC+ meeting over the weekend, which could decide on further voluntary production cuts for July.
Sources: [1] Reuters, [2] Financial Times, [3] CNBC
In light of the ongoing trade dispute between the US and China, the community policy affecting investments on Wall Street remains a critical concern for businesses and financiers. This dispute, alongside the legal battles over President Trump's powers, has led to a stagnant economic and monetary union (EMU), with indices showing little movement.
The recent court decision allowing the tariffs to remain in place for now has further fueled doubts about the future of the EMU, as it carries the risk of retaliatory measures that could negatively impact finance, business, and monetary union. Consequently, analysts might reconsider their optimistic outlook about a possible easing of global trade tensions.
