U.S. stock futures declined on Sunday evening, signaling a potentially cautious start to June after a strong performance in May. Futures tied to major indexes like the S&P 500, Nasdaq-100, and Dow Jones Industrial Average were down around 0.3%, with the Dow falling 108 points. Despite the upbeat finish to last month, investors appear to be rebalancing their expectations heading into a new trading period.
Market Gains in May Face Doubts Amid Tariff Uncertainty and Trade Tension Revival
May ended on a high note for the markets, with the S&P 500 posting a gain of over 6%—its best showing since November 2023. The Nasdaq Composite surged over 9%, driven by tech stocks, while the Dow Jones rose about 4%. However, analysts like Morgan Stanley’s Chris Toomey remain skeptical that this momentum can be sustained, citing a potentially over-optimistic pricing of market scenarios.
Wall Street Cools After May Rally as Tariff Fears and Trade Tensions Weigh on June OutlookConcerns around U.S.-China trade tensions resurfaced following mixed legal developments regarding former President Donald Trump’s tariffs. A U.S. trade court struck down large portions of the tariffs, only for a federal appeals court to temporarily reinstate them. Economic officials in the Trump camp maintain confidence in the tariffs’ legality and impact, suggesting they remain a fixture of U.S. trade policy for now.
U.S.-China Trade Talks May Resume as Investors Shift to Short-Term Treasury Bonds
There is speculation that trade discussions between the U.S. and China could resume soon, although no formal date has been announced. National Economic Council Director Kevin Hassett hinted that President Trump and Chinese President Xi Jinping might engage in talks in the near future. The backdrop to this is renewed criticism from Trump, who accused China of breaching trade agreements in a recent social media post.
Amid ongoing uncertainty and volatility, investors are increasingly favoring short-term Treasury instruments, a move mirrored by Warren Buffett’s Berkshire Hathaway. Bond expert Joanna Gallegos noted that the short and mid-duration yields have remained relatively stable, with 3-month, 2-year, and 10-year Treasury yields hovering around 4.3%, 3.9%, and 4.4%, respectively. This comes as longer-term yields recently surged due to concerns over a potential tax bill and widening budget deficits.
