June 2nd, 2025
Market Performance:
- S. assets were all diving on Monday as geopolitical concerns amplified. Stocks, treasures, and the dollar slipped.
- The Dow Jones Industrial Average fell around 0.3%, or around 150 points. The S&P 500 was roughly flat, while the tech-heavy Nasdaq Composite rose 0.3%
- The Fed chair Jerome Powell is speaking live about the economy, which began at 1PM EST. President Donald Trump met with Powell last Thursday and the two discussed the economy but not Powell’s outlook for interest rates, the Fed said.
Economic Takeaways:
- Federal Reserve Governor Christopher Waller said on Monday he’s still open to rate cuts this year but warn that tariffs could be “the largest factor driving inflation.”
- Last Friday’s inflation data was benign, but the full impact of tariffs likely hasn’t arrived.
- Job numbers will take center stage this week, building up to a keystone May nonfarm payrolls report Friday. The report is expected to show jobs growth of 130,000, down from April’s 177,000.
- Tariffs continued to make headlines as Trump promised higher steel and aluminum tariffs and vowing there’d be no extension of a 90-day tariff pause due to expire next month.
- China remarked today that the U.S. was at fault for violating the recent trade agreement after the White House accused China of violating it Friday.
- The S&P Global manufacturing PMI came in at 52.
- Gold climbed more than 2% amid signs of rising geopolitical tension.
- Crude oil jumped over 4% early Monday to above $63 per barrel amid rising tensions in the Ukraine-Russia war. Opec and allies announced on Saturday that the cartel will raise oil production by 411,000 barrels a day in July.
- Bitcoin went lower this morning after recently posting all-time highs above $112,000.
- As of early Monday, futures trading indicated just a 1% chance of a Fed rate cut in June, and 23% in July, according to the CME FedWatch Tool.
Legal Deadline Looms for President Trump
The constitutionality of President Trump’s “reciprocal” tariffs may ultimately be decided by the Supreme Court. If the Court strikes them down, the Trump administration is expected to seek alternative methods to raise tariffs. These alternatives could be less arbitrary, more limited in scope and scale, or may require more time to implement, according to Jeffrey Kleintop, Chief Global Investment Strategist, and Michelle Gibley, Director of International Research at the Schwab Center for Financial Research.
The legal battle is expected to unfold over the coming weeks. Should the administration lose, one possible path forward would be to enact universal tariffs of 10% to 15% under a different legal authority, although such measures could only remain in effect for up to 150 days.
A key deadline arrives this Thursday, when the U.S. Court of International Trade—having ruled the tariffs unconstitutional last week—must respond to the Trump administration’s appeal, which has temporarily kept the tariffs in place.
In a potentially encouraging sign for U.S.-China relations, Treasury Secretary Scott Bessent said on Sunday that President Trump and Chinese President Xi are expected to speak “very soon,” and expressed confidence that recent tensions over alleged violations “will be ironed out,” according to Bloomberg.
“Trade negotiations likely will become more difficult and there may be less urgency for countries to cut deals now, particularly for those with less exposure to targeted sectors,” Schwab’s Jeffrey Kleintop and Michelle Gibley wrote. “There may be some relief that tariffs may be less arbitrary and reduced in severity or duration, but the next steps are complicated and likely to extend uncertainty for businesses and the economic outlook.”
“The market reaction toward trade-related headlines has been much more muted recently,” versus in April, said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.
Top of Form
Notables
- Cleveland-Cliffs (CLF) rose more than 26% ahead of the open following President Trump’s vow to raise steel and aluminum tariffs to 50% from 25%.
- Nucor (NUE), another steelmaker, rose nearly 11%.
- Tesla (TSLA) dipped 1.6% ahead of the open. Tesla’s sales in France fell 67% and Chinese electric car makers enjoyed a strong month in May, posing competition there for Tesla.
- Nvidia (NVDA) fell 0.6% in pre-market trading.
- Biopharmaceutical firm Blueprint Medicines (BPMC) exploded 26% early today after French firm Sanofi agreed to buy the immunology-disease specialist for up to $9.5 billion.
- Boeing (BA) leaped 1.4% after getting an upgrade to Buy from Bank of America (BAC), which cited recent orders and diminished trade tensions.
- The Campbell’s Company (CPB) moved up slightly after an earnings results beat analysts’ estimates. The company also reaffirmed previous guidance that’s in line with consensus views.
What’s Important This Week
It’s quieter on the earnings front this week but there are a few names to watch: CrowdStrike (CRWD) reports tomorrow, while lululemon (LULU) and Broadcom (AVGO) report Thursday.
Later in the week we will see April factory orders, April Job Openings and Labor Turnover Survey (JOLTS) and the May ISM Services PMI®.
Friday will headline with May Nonfarm payroll and May unemployment.
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