Wall Street Takes a Beat amid Growing Trade Uncertainties
Stock market slips, ending a 9-day positive run, while oil prices fall significantly.
NEW YORK - Stocks took a dive on Wall Street Monday, snapping a nine-day winning streak, as oil prices plunged to a four-year low following the OPEC+ group's announcement to boost output.
The day saw relatively subdued trading, with a mixture of gains and losses. This comes after several weeks of positive momentum that helped the market recuperate losses incurred since the trade war kicked off.
The Standard & Poor's 500 index shedded 36.29 points, or 0.6%, closing at 5,650.38. This marked the S&P 500's longest winning streak since 2004, before being broke.
Meanwhile, the Dow Jones industrial average fell 98.60 points, or 0.2%, to stand at 41,218.83. The Nasdaq composite dropped 133.49 points, or 0.7%, to 17,844.24.
Tech heavyweights and other major stocks bore the brunt of the market's slide. Apple plummeted 3.1%, Amazon fell 1.9%, while Tesla slipped 2.4%. Berkshire Hathaway dipped 5.1%, as legendary investor Warren Buffett announced his intention to step down as CEO by the end of the year, after six decades at the helm.
The OPEC+ group of eight oil-producing nations revealed plans to up output by 411,000 barrels a day as of June 1. The move sent U.S. crude oil prices tumbling 2% to $57.13 per barrel. Many producers are struggling to make a profit once oil prices slip below $60.
Markets have been grappling with the shock of tariffs and the ongoing trade war. President Trump has imposed import taxes on a multitude of imports, eliciting retaliation from global trading partners. Although some of the more draconian tariffs, initially scheduled for April, were delayed by three months, the exception being tariffs against China, market, and economic anxiety persists.
Uncertainty about the impact of current and future tariffs continues to loom over markets and the economy, with Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management, warning of "further bouts of volatility" and weakening economic data in the coming months.
Market attention will now shift towards the Federal Reserve's meeting this week, where it's expected to maintain its benchmark interest rate steady. The Fed reduced the rate three times in 2024 before adopting a more cautious stance, due to concerns over stubbornly high inflation, before it falls just below its target rate of 2%.
As the U.S. economy contracted 0.3% in the first quarter—the first drop in three years—industry experts remain hopeful about the economy's continued resilience. Consumers, despite growing more wary, are still spending, while economic activity in the services sector kept expanding in April according to a survey from the Institute for Supply Management.
Trade tensions have been a major source of unease for the market. Trade policies have been subject to constant fluctuations under President Trump, with tariffs being imposed, only to be rescinded or delayed on a daily basis. This inconsistency has left businesses, households, and economists struggling to predict the economy's trajectory and make informed decisions accordingly.
One of the latest developments came Sunday night, when President Trump announced he has authorized a 100% tariff on movies produced outside the U.S. The exact impact of this measure remains unclear, as it's common for films to include production at various locations around the world. Netflix plummeted 1.9%, while Warner Bros. Discovery fell 2%.
Meanwhile, footwear manufacturers experienced a boost after the announcement that Skechers is being acquired for $9 billion and taken private by investment firm 3G Capital. Skechers ascended 24.3%, while Crocs rose 3.4%, and Deckers Outdoor, which owns the Ugg and Teva brands, climbed 1.2%.
Treasury yields edged up. The yield on the 10-year Treasury climbed to 4.35% from 4.31% late Friday.
Troise writes for the Associated Press.
More to Read:
U.S. stocks slump again as uncertainty persists about Trump's tariffs
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Global financial markets and the dollar lose ground as investors retreat from the United States
Points to Ponder:
The current trade war and tariffs are causing financial market volatility and disrupting global trade. Analysts suggest that the trade tensions might increase the risk of a global recession and adversely affect various sectors. The ongoing uncertainty might continue to exert pressure on the markets and the economy in the coming months.
- The unexpected move by President Trump to impose a 100% tariff on movies produced outside the U.S. caused Netflix and Warner Bros. Discovery to plummet, while footwear manufacturers experienced a boost with Skechers being acquired for $9 billion.
- The ongoing trade tensions and tariffs are causing financial market volatility, disrupting global trade, and increasing the risk of a global recession. Analysts suggest the ongoing uncertainty might continue to exert pressure on the markets and the economy in the coming months.
- The long-term implications of President Trump's tariffs on movies and other trade policies are yet to be fully understood, but the inconsistency has left businesses, households, and economists struggling to predict the economy's trajectory.
- The unpredictable trade policies under President Trump have created a challenging environment for businesses, with tariffs being imposed, only to be rescinded or delayed on a daily basis. This inconsistency continues to cause uncertainty in the general-news and finance sectors.
- The Federal Reserve will hold a meeting this week, and market attention is focused on maintaining its benchmark interest rate steady, while addressing concerns over stubbornly high inflation. The economy's resilience in the face of ongoing trade tensions remains a topic of interest for industry experts.
