Stocks Plummet as Trump Blasts China on Trade Agreement

Stocks opened lower on Friday after President Donald Trump claimed that China has “totally violated” its trade agreement with the United States. The Dow Jones Industrial Average dropped 130 points, or 0.3%, while the S&P 500 and Nasdaq Composite slid by 0.35%. Trump took to social media to express his frustration, stating, “The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!”

This development has added to the uncertainty in the markets, which had been cautious about the next steps in Trump’s trade war. Despite a recent boost after the Court of International Trade blocked most of Trump’s tariffs on legal grounds, the rally lost steam as traders bet on an aggressive appeal from the White House. A federal appeals court subsequently paused the CIT’s ruling, leaving the tariff agenda in limbo.

Experts warn that the trade dispute will not be resolved quickly. “The stunning, head-spinning, mind-boggling trade fiasco will not be resolved quickly,” said Greg Valiere, chief US policy strategist at AGF Investments. “It probably will land in the Supreme Court — and even that may not settle the issue.”

Meanwhile, investors are digesting fresh data showing the Federal Reserve’s preferred inflation gauge cooled in April more than expected, but also revealed a significant drop in consumer spending. The S&P 500 has climbed over 6% this month, on track for its best month since 2023 and best performance in May since 1990.

Despite recent fluctuations, experts expect ongoing market volatility. “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.

Market Insights:

• Dow Jones: down 130 points, or 0.3%
• S&P 500: slid by 0.35%, up over 6% this month
• Nasdaq Composite: slid by 0.35%
• US Dollar Index: slightly gained on Friday, but on track to end the month in the red for the fifth month in a row

In related news, China has launched a new global mediation body in Hong Kong to rival the International Court of Justice, aiming to elevate the city’s role as a global center for mediation and dispute resolution.