Financial sector maintains stability amidst trade conflict over tariffs and customs regulations
Tariff Dispute Clouds Wall Street as US Stocks Maintain Cautious Stance
In the final trading day of the week, Wall Street indices held steady amid ongoing tariff disputes between President Donald Trump and China. The legal battle over the president's powers and pointed accusations from the White House against China are keeping the indices in a state of limbo as the week comes to a close.
US stocks have grown accustomed to the President's tariff policy and associated market turbulence. On Friday, the tariff dispute remained the primary focus, with President Trump launching verbal attacks on China, accusing it of violating the terms of the recently agreed trade deal.
Economy
The court's ruling served as a dampener, as a federal appeals court decision permitted the Trump administration's tariffs to remain in place, at least temporarily. The market's reaction was moderated, as skepticism surrounding tariffs had been evident since the US Court of International Trade's decision to ban the tariffs was subsequently overturned.
The Dow Jones Index managed to eke out a marginal gain of 0.1 percent, closing at 42,270 points. The S&P-500 ended the day unchanged, while the Nasdaq Composite slipped by 0.3 percent. However, the S&P-500 and the Dow Jones Index ended the month of May with a gain for the first time since January, buoyed by rising optimism about a potential easing of global trade tensions.
Individual Stocks
Dell shares suffered a 2.1 percent decline following initial gains, after the computer manufacturer raised its earnings targets for the first quarter. In contrast, American Eagle Outfitters fell into the red in the first quarter and withdrew its full-year guidance, causing its stock to drop by 2.0 percent. Gap shares plummeted by 20.2 percent, reflecting expectations that US tariffs could significantly increase the company's costs.
Marvell Technology returned to profitability due to strong artificial intelligence demand, but its stock still fell by 5.6 percent given its outlook only met expectations and the continuing effects of trade tensions. Conversely, beauty conglomerate Ulta Beauty reported a 11.8 percent increase in share price, while the disappointing result of a drug trial led to a significant 19.1 percent drop in Regeneron's stock price.
Currency and Commodities
The dollar briefly recovered after a federal appeals court ruling but ultimately displayed little change. According to analysts at Bank of America, U.S. tariffs are more detrimental to the U.S. economy and the dollar than to other countries and currencies. Tariffs carry the risk of retaliation, and the U.S. "trades more with the rest of the world than the rest of the world trades with the U.S.," experts say.
Bond yields eased slightly. The 10-year yield fell by 4 basis points to 4.39 percent. Gold futures contract value slid by 0.8 percent to $3,294, marking a four-month losing streak as a firmer dollar weighed on the precious metal's price.
Oil prices initially dipped following Trump's verbal attack on China but subsequently recovered with steeper losses. Brent and WTI futures fell by up to 0.4 percent, with traders awaiting the outcome of the Opec+ meeting this weekend, where potential further voluntary production cuts for July could be decided.
The ongoing tariff dispute between the US and China calls for a review of the community policy regarding economic and monetary union, as it significantly impacts global business and investing. This situation also raises concerns in politics and general-news, as it has the potential to influence the economic and monetary union on a broader scale. In light of the instability, analysts in the finance sector are advising caution when making investment decisions.
