Stocks futures drop as Trump claims China has ‘violated' trade agreement
Stock futures fell Friday after President Donald Trump said China has 'totally violated' its trade agreement with the United States, sending another jolt to markets after a whiplash week of tariff developments.
Dow futures were down 100 points, or 0.3%. S&P 500 futures and those tied to the Nasdaq 100 both slid 0.3%.
'The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,' the president posted on social media. 'So much for being Mr. NICE GUY!'
Wall Street has been cautious about the next steps in Trump's trade war. Stocks had received a boost this week after the Court of International Trade late Wednesday blocked most of Trump's tariffs on legal grounds, but that rally lost steam as traders bet the White House would aggressively appeal and pursue another legal strategy.
A federal appeals court on Thursday paused the CIT's ruling to block Trump's tariffs, leaving the president's massive tariff agenda in limbo as the courts deliberate its legality.
'The stunning, head-spinning, mind-boggling trade fiasco will not be resolved quickly,' said Greg Valiere, chief US policy strategist at AGF Investments, in a note. 'It probably will land in the Supreme Court — and even that may not settle the issue.'
Investors on Friday also digested fresh data that showed the Federal Reserve's preferred inflation gauge cooled in April slightly more economists had expected, but also revealed a significant drop in consumer spending.
Trump has reignited his trade war in the past week, which has stirred up uncertainty in markets after Wall Street had begun to turn the page on tariff concerns. The S&P 500 has been steadily climbing out of an early April slump instigated by the president's back-and-forth on his 'reciprocal' tariffs.
Despite the recent fluctuations, investors who sold at the start of May missed out on a historically strong month for markets. The benchmark index is up more than 6% this month and is on track for its best month since 2023 and its best performance in May since 1990.
'Even though the stock market has staged a decisive rebound since the April lows, there is still plenty of uncertainty on tariffs, especially given the legal battle that is brewing over the 'Liberation Day' tariffs,' said Clark Bellin, president and chief investment officer at Bellwether Wealth.
The dollar slightly gained on Friday. Yet the US dollar index, which measures the dollar's strength against six major foreign currencies, is on track to end the month in the red. It would be the dollar's fifth month of decline in a row.
'We expect bouts of market volatility ahead as investors continue to navigate a range of market, economic and geopolitical risks,' said Ulrike Hoffmann-Burchardi, CIO of global equities at UBS Global Wealth Management, in a Thursday note.
The benchmark S&P 500 is up about 0.5% this year.
This is a developing story and will be updated.
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