U.S. stock futures fell early Monday as trade tensions between the U.S. and China worsened. The Chinese government blamed Washington for failing to uphold a recent trade deal. This comes after U.S. accusations that China violated the Geneva trade agreement.
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Futures tied to the S&P 500 and Nasdaq-100 were down by 0.53% and 0.68%. Futures linked to the Dow Jones Industrial Average also declined 174 points, or 0.41%.
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National Economic Council Director suggested that President Biden and China’s President Xi Jinping could have a conversation about trade this week.
On Friday, markets closed out May with significant gains. The S&P 500 posted a gain of over 6%, its best monthly performance since November 2023. The Nasdaq surged more than 9% for the month, while the Dow rose about 4%.
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However, skepticism remains about whether May’s market momentum will continue. “We’re probably still range-bound,” said Morgan Stanley’s Chris Toomey. He pointed out that although the market has adapted to new tariff scenarios, uncertainties persist.
Two key court rulings have influenced tariffs. Last Wednesday, the U.S. Court of International Trade ordered the administration to stop collecting certain tariffs. However, a federal appeals court temporarily paused that ruling, effectively reinstating the duties.
Commerce Secretary Howard Lutnick expressed optimism that tariffs would be upheld despite the legal challenges.
Stock futures drop amid trade tensions
National Economic Council’s Kevin Hassett also conveyed confidence that the tariffs will be legally upheld.
Investors are closely watching for developments that could provide insight into how tariffs are affecting the U.S. economy. Key data points include the May nonfarm payrolls report due this Friday. Amid bond market volatility, investors are leaning into shorter-term Treasury bills.
“There’s lots of concern and volatility, but on the short and middle end, we’re seeing less volatility and stable yields,” said Joanna Gallegos, CEO and founder of bond ETF company BondBloxx. Last month, concerns over a new U.S. tax bill potentially exacerbating the budget deficit stirred market sentiment, affecting Treasury yields. Stocks saw gains last week, contributing to May’s strong performance for the major averages.
The S&P 500 gained 1.88% week-to-date, the Nasdaq 1.6%, and the Dow 2.01%. The Russell 2000 advanced 1.3%, marking its seventh positive week in eight. Stock futures traded lower Sunday evening.
S&P 500 futures were down about 0.3%, Nasdaq-100 futures fell similarly, and Dow Jones Industrial Average futures declined by 95 points, or 0.2%. U.S. stock futures declined after President Trump announced plans to double tariffs on imported steel and aluminum. The May jobs report, due at the end of the week, could offer insight into how businesses are coping with the threat of higher tariffs.
Economists expect that the U.S. economy added 130,000 nonfarm payroll jobs while the unemployment rate held steady at 4.2%, according to Bloomberg. Oil prices rose over the weekend amid escalating tensions between Russia and Ukraine. In a recent attack, Ukraine allegedly destroyed more than 40 planes well within Russian territory, according to The Associated Press.
Moderna’s low-dose COVID vaccine, mNexspike, received Food and Drug Administration approval for adults 65 and older and individuals aged 12 to 64 with at least one health condition that increases their risk from the coronavirus.
