Stock Market Ends Session in Uptick
The Market Rides the Trade Tension Wave
In the heart of the week, the colossal Wall Street observed a bullish closing on Monday, amidst the intensifying trade feud with significant partners like Canada and China. The robust American economy, rather than the heated diplomatic exchanges, seemed to captivate the market.
The Dow Jones brushed aside the tension by just 0.08%, the NASDAQ surged 0.67%, and the S&P 500 advanced 0.41%. In a recent trade development, China firmly rebuffed US allegations of violating a deal reached last month to lower tariffs.
The Chinese authorities and the US administration had, in fact, agreed to pause the escalating trade war and continue talks to reach a definitive deal. However, President Trump declared a sudden double on tariffs for steel and aluminum, to be implemented Wednesday.
According to Angelo Kourkafas of Edward Jones, the market has grow accustomed to the never-ending parade of tariff headlines, as they tend to blow over. Market players, however, are concentrating more on crucial economic data and the upcoming earnings season, which offers some support despite the prevailing uncertainties.
U.S. manufacturing activity continued its downward spiral in May, contracting for the third straight month to 48.5%. The market is keenly awaiting several employment-related data this week, including the unemployment rate scheduled for release on Friday.
On the bond market, the yield on 10-year US Treasury bonds hovered at 4.44% around 16:15 ET (20:15 GMT), compared to 4.40% at the close on Friday.
In the artificial intelligence sector, giants such as Nvidia (+1.67% to $137.38) and other tech heavyweights like Microsoft (+0.35% to $4614.97) and Apple (+0.42% to $201.70) closed in the green.
The recent agreement between Boeing and the US government, in regard to the fatal crashes of 2018 and 2019, stirred optimism, causing Boeing shares to climb 2.00% to $211.47. Rising steel and aluminum tariffs fostered gains in the sector, with Cleveland-Cliffs (+23.16% to $7.18) and Nucor (+10.10% to $120.40) among the winners. Contrastingly, U.S. Steel faced a slight setback, falling 0.54% to $53.53.
Meanwhile, the Canadian stock market showed an upward trend on Monday, reaching a record high. Energy stocks contributed positively to this achievement, despite initial apprehension over potential U.S. tariffs on aluminum and steel, along with geopolitical uncertainties in Ukraine and the Middle East. The S&P/TSX composite index added 213.91 points to 26,388.96.
The Canadian market displays a sensitivity to trade tensions due to its substantial trade connectivity with the U.S., which represents about 20% of Canada's GDP. Escalating trade disputes could potentially impact the Canadian economy, leading to declines in GDP and potential job losses. In contrast, the U.S. market, despite ongoing trade tensions, particularly with China, has shown remarkable resilience, with some sectors like artificial intelligence realizing impressive growth.
Political uncertainties, including trade tensions with China and Canada, have little impact on the American economy and business, as investors focus more on crucial economic data and the upcoming earnings season for potential growth opportunities. In the technology sector, companies such as Nvidia, Microsoft, and Apple saw gains, while the rising steel and aluminum tariffs foster gains in manufacturing companies like Cleveland-Cliffs and Nucor.
