Overview of the Day’s Market Activity
The benchmark S&P 500 closed the mid-week trading session with modest gains, supported by technology stocks. However, some initial gains evaporated as weak economic data revealed the cost of President Donald Trump’s erratic trade policies.
- The Nasdaq Composite increased by 0.3% to 19,460.5 points.
- The S&P 500 closed virtually unchanged at 5,970.8 units.
- The Dow Jones Industrial Average fell 0.2% to 42,427.7 points.
Key Sector Performances
Communication services led the gains among sectors, while energy experienced the largest decline. The U.S. services sector contracted for the first time in nearly a year in May, with companies paying higher prices for inputs. This indicates the economy still risks experiencing slow growth and high inflation.
Jeffrey Roach, Chief Economist at LPL Financial: “It is likely that the impact of tariffs is driving up prices paid by service sector companies.”
The ADP national employment report showed that private employers added the fewest workers in over two years in May. Investors now look forward to Friday’s non-farm payroll data for further signals on how trade uncertainty is affecting the labor market.
Trade Tensions and Economic Data
Washington doubled tariffs on imported steel and aluminum to 50% on Wednesday, the same day Trump wants his trade partners to make their best offers to avoid further penalties on imports taking effect in July.
Investor attention is focused directly on trade negotiations between Washington and its trading partners, with expectations that Trump and Chinese leader Xi Jinping will speak at some point during the week.
May was the best month for the S&P 500 and Nasdaq since November 2023, thanks to Trump’s softened trade stance and optimistic earnings reports. The S&P 500 is less than 2% away from its February record high.
Mexican Stock Market Continues Downward Trend
The Mexican stock market extended its losing streak to five days, its longest since November, amid anticipation of local and international economic data.
- The S&P/BMV IPC, Mexico’s primary stock index, fell 0.27% to 57,484.52 points.
- The FTSE-BIVA, Mexico’s Institutional Securities Index, dropped 0.37% to 1,161.27 units.
Investors are considering Mexico’s government statement that it is analyzing its response if the U.S. maintains 50% tariffs on steel and aluminum imports starting June 4.
Economic data highlights include fixed investment rising more than expected, while private consumption disappointed analysts’ consensus. Meanwhile, auto sales declined for the second consecutive month.
