S&P 500 Rebounds Despite Escalating U.S.-China Trade Tensions
The S&P 500 reversed earlier losses on Monday, finishing higher despite growing concerns over a potential global trade war sparked by worsening relations between the U.S. and China.
As of 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average rose by 35 points (0.1%), the S&P 500 climbed 0.5%, and the Nasdaq 100 advanced 0.7%.
The rebound follows a strong May performance, where the S&P 500 surged over 6%—its best monthly gain since November 2023.
China Dismisses U.S. Allegations Amid Renewed Tensions
On Monday, China denied accusations from President Donald Trump that it had breached a trade pact agreed upon in Geneva, escalating the ongoing war of words and suggesting that trade talks are faltering.
China’s Commerce Ministry labeled Trump’s claims as “groundless” and vowed to take firm action to protect its interests. This response followed Trump’s Friday remarks that China had broken its commitment to scale back tariffs.
Trump also announced plans to double U.S. tariffs on imported steel to 50%, effective June 4. Commerce Secretary Howard Lutnick confirmed over the weekend that these tariffs would remain in place, despite facing legal challenges.
Although a trade court had temporarily blocked Trump’s tariff plans last week, an appeals court quickly reinstated them. The issue is expected to reach the Supreme Court, and Trump has indicated he will explore alternative legal pathways to enforce the tariffs.
Economic Data and Fed Comments in Focus
Markets are eyeing several key U.S. economic indicators this week, starting with Monday’s PMI readings from S&P and ISM, alongside speeches from several Federal Reserve officials.
Fed Chair Jerome Powell offered little new insight on monetary policy during a conference speech Monday, while other Fed members suggested rate cuts could be on the horizon.
Chicago Fed President Austin Goolsbee reiterated expectations for future rate reductions once tariff uncertainty subsides. Fed Governor Christopher Waller, speaking in South Korea, echoed this sentiment, saying any inflation stemming from tariffs was likely temporary.
Waller added that if inflation keeps trending toward the Fed’s 2% goal and employment remains strong, he would support rate cuts later this year.
Chip Stocks Stabilize, Aluminum Shares Rise on Tariff News
Semiconductor stocks such as Nvidia (NVDA), Marvell (MRVL), and TSMC (TSM) pared losses despite news that the Trump administration may broaden tech restrictions on China. A proposed rule would require licenses for dealings with subsidiaries of already-sanctioned firms—aiming to close regulatory loopholes.
Meanwhile, shares of U.S. metals producers including Cleveland-Cliffs (CLF), Nucor (NUE), and Steel Dynamics (STLD) surged following Trump’s announcement of higher steel and aluminum tariffs.
Energy Sector Climbs on Oil Price Rally
Energy stocks also posted strong gains, fueled by rising oil prices after OPEC+ confirmed a July production increase of 411,000 barrels per day—the same pace as in the past two months.
Companies such as APA Group, EQT Holdings, and Coterra Energy (CTRA) rallied on the news, as markets took relief from speculation of a larger supply boost.
