June May Start off Bearish for Stock Market Thanks to Trump Tariffs
The stock markets are looking bearish as we head into June, despite a strong month in May that saw tech stocks dominate.
Quick overview
- Stocks closed down on Friday, with the Nasdaq Composite dropping 0.32% and the S&P 500 losing 0.01%, while the Dow Jones gained 0.13%.
- Despite a strong performance in May, analysts are concerned about market fragility due to ongoing trade tensions between the U.S. and China.
- President Trump has increased tariffs on imported aluminum and steel, raising concerns about future negotiations with trade partners.
- As June begins, all major indices are trending down in premarket trading, reflecting fears over the impact of rising trade tensions.
As trading closed off Friday for the bullish May month, stocks were trending down, with the Nasdaq Composite dropping 0.32% and the S&P 500 losing 0.01%.
The Dow Jones was the only one of the three major indices that closed high on Friday, adding 0.13% as the month finished. We expect that the stock markets will stay mostly low as June begins, primarily due to rising tensions between China and the United States.
The stock market did very well through much of May, with the S&P 500 achieving its best numbers in 35 years. We saw a major market rebound across the stock indices, indicating a recovering economy and a strong stock market. Analysts are still worried about fragility in the markets, though, especially since the trade war that President Donald Trump is waging with the world has not come to an end yet.
Despite a halt on new tariffs for the European Union and China, it looks like Trump is still interested in spurring negotiations with various trade partners by threatening them with new tariffs. On Friday, Trump put more pressure on China by doubling the tax on imported aluminum and steel, moving that tariff from 25% to 50%.
Stock Market Indices Record Victories
Throughout the month of May, the stock market indices fluctuated wildly, but they eventually all posted gains overall. The Dow Jones recorded an increase of 4% for the month, and the S&P 500 added 6%. The Dow Jones increased by 9% in May.
Most of the gains came from tech stocks, which account for Nasdaq’s stellar performance. Tesla (TSLA), Netflix (NFLX), and Broadcom (AVGO) were among the top performing stocks for the month, managing to bring their year-to-date numbers much higher and bringing in considerable trade to the stock market.
What to Expect This Week
We are seeing some bearish movement already for Monday to start off June. All three major indices are trending down in premarket trading, demonstrating that the markets are afraid of how rising trade tensions between China and the United States are going to affect the market moving forward.
The added tariff on steel and aluminum could be put on pause like so many other tariffs, but it is clear that the two countries have not worked out their trade disagreements over tariff disparities. Of course, Trump wants to see change in more than just the amount United States goods are being taxed. He is also pushing for increased security from trade partners when it comes to allowing illegal drugs, weapons, and immigrants from those countries.
His strong negotiating tactics have worked to some degree in Mexico and Canada, but he has had a tougher time of getting what he wants from China. As these two countries continue to butt heads, the market will remain very unstable and fragile and can easily shift from one extreme to another.
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