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US stocks closed out a wild month with a whimper as tariff jitters returned to Wall Street.
Stocks bounced around in a choppy trading session on Friday after President Donald Trump said China has “totally violated” its trade agreement with the United States — without specifying details — sending another jolt of uncertainty through markets.
The Dow closed higher by 54 points, or 0.13%, after fluctuating throughout the day. The broader S&P 500 edged lower by 0.01% and the tech-heavy Nasdaq Composite fell 0.32%.
Stocks had taken a step lower during the day on a report that said the Trump administration is considering broadening tech sanctions on China. The S&P 500 and Nasdaq dropped as much as 1.1% and 1.7%, respectively, in the afternoon after Bloomberg reported that the White House is mulling adding “licensing requirements on transactions with [Chinese] companies that are majority-owned by already-sanctioned firms.”
Stephen Miller, White House deputy chief of staff for policy, also told reporters on Friday that the Trump administration is preparing other trade actions to target China, according to Reuters.
Stocks pared some of their losses in the late afternoon, but the S&P 500 and Nasdaq still closed in the red as trade uncertainty persists.
“The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,” the president posted on social media early Friday morning. “So much for being Mr. NICE GUY!”
While stocks were lower Friday, the overall reaction from markets was relatively muted. Wall Street has started to bet that if Trump makes a trade war threat, he will eventually back down. It’s what’s been called the ‘TACO’ trade — or ‘Trump Always Chickens Out’.
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, posting its best month since November 2023 and its best performance in May since 1990.
The Nasdaq, which is up about 9.5% this month, also posted its best month since November 2023.
“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.
Trade war back in focus
The president’s jab at China on Friday comes at the end of a week where the trade war has returned to the center of focus. 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.