Wall Street wavers midday as trade tensions simmer, weak factory data hits sentiment

Wall Street wavers midday as trade tensions simmer, weak factory data hits sentiment

US stocks traded mixed on Monday, with the Dow Jones Industrial Average falling 191 points as investors weighed escalating trade friction with China and fresh signs of economic cooling.

By midday, the S&P 500 was down 0.07%, or about 4 points, while the Nasdaq Composite edged 0.25% higher, lifted by tech resilience even as broader sentiment showed signs of fatigue.

Markets are struggling to hold on to May’s bullish momentum — the S&P’s 6% surge last month marked its best May since 1990 — as new headwinds take shape. Tensions between Washington and Beijing resurfaced after China pushed back against US accusations of breaching a trade truce, instead blaming Washington for disrupting the fragile agreement with export controls and visa curbs.

The tit-for-tat rhetoric came alongside Trump’s fresh tariff threat — a plan to double duties on steel and aluminum to 50% starting Wednesday, which could further strain relations with the EU. While a federal court briefly struck down the tariffs last week, a higher court reinstated them over the weekend pending further review.

Trade angst wasn’t the only drag. New data from the Institute for Supply Management showed US manufacturing activity contracted again in May, with import levels falling to their lowest since 2009 — a worrying sign for domestic demand and supply chain momentum.

Meanwhile, the US dollar continued to slide, pressured by expectations of interest-rate cuts amid rising geopolitical and trade-related uncertainty. Gold futures rose nearly 2% as investors sought safety following Ukraine’s weekend drone strikes on Russian military targets.

Brent crude climbed toward $65 a barrel, buoyed by OPEC+’s decision to add supply more modestly than expected, and lingering concerns over compliance from countries like Russia.

Markets are now focused on whether Fed Chair Jerome Powell and other officials, scheduled to speak later today, echo Governor Christopher Waller’s Monday remarks that any tariff-driven inflation is likely to be short-lived — keeping the door open for "good news" cuts later this year.

European markets remained broadly lower, with the DAX, CAC 40, and FTSE MIB in the red as the EU threatened retaliation against Trump’s tariff moves. The FTSE 100 was flat after a slightly improved UK manufacturing PMI, though the index remained below the 50-mark that separates contraction from growth.