3 June 2025 | S&P 500

S&P 500 advances despite escalating trade tensions between US and China

S&P 500 advances despite escalating trade tensions between US and China

US stocks finished higher on Monday, with investors largely showing no reaction to escalating US trade tensions with China and the European Union. The S&P 500 index rose about 0.4%, while the Nasdaq Composite index, tracking technology companies, climbed 0.7%.

Earlier on, international relations took a turn for the worse as the US clashed with other major economies following President Trump's announcement of his intention to double tariffs on steel and aluminum imports to 50%. Meanwhile, a federal court last week invalidated many of the duties imposed by the US, easing market fears. A day later, however, a higher court temporarily reinstated them. On Monday, the EU spoke out against Trump's imposition of duties on steel and aluminum.

Against this backdrop, the US dollar is declining as markets assess the risks of trade tensions, focusing on the possibility of accelerating inflation and slowing growth in the United States economy.

Nevertheless, as head of Yardeni Research Ed Yardeni points out, compared to April volatility, stock markets are now almost unresponsive to changes in Trump's trade policy.

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