Markets opened June with renewed volatility as global trade tensions resurfaced, dragging the Dow Jones Industrial Average down 200 points. The S&P 500 slipped 0.2%, while the Nasdaq remained mostly flat.
The downturn came as U.S.-China relations grew strained. China rejected U.S. claims of violating a temporary trade agreement and countered that Washington failed to uphold its commitments. This dispute follows recent talks in Geneva that temporarily paused tariffs. A direct call between President Donald Trump and Chinese President Xi Jinping is expected this week.
“This back-and-forth could prolong volatility, but a clear resolution could drive markets to new highs,” said Jay Woods, Chief Global Strategist at Freedom Capital Markets.
U.S.-EU tensions also flared after Trump announced plans to double steel tariffs to 50%, prompting an EU warning that such moves raise costs and sow economic uncertainty.
Steelmakers rallied sharply in response: Cleveland-Cliffs surged 25%, while Steel Dynamics and Nucor jumped nearly 10%.
Meanwhile, economic data showed continued weakness. U.S. manufacturing contracted for the second month, with the ISM index at 48.5%, and construction spending fell 0.4% in April.
JPMorgan analysts warned that the full impact of tariffs—especially on inflation and growth—has yet to hit, noting a possible slowdown in consumer activity and rising prices in the months ahead.
Adding to the market pressure, shares of Flutter Entertainment and DraftKings fell after Illinois passed a higher sports betting tax, which analysts say could push users to illegal markets and lead to similar hikes in other states.