Stocks Set to Open Lower as Trade Tensions Flare, U.S. Jobs Data and Powell Speech Awaited

June S&P 500 E-Mini futures (ESM25) are down -0.57%, and June Nasdaq 100 E-Mini futures (NQM25) are down -0.69% this morning, starting the new month on a downbeat note as escalating global trade tensions weighed on investors’ risk appetite. 

Late Friday, U.S. President Donald Trump said he would double tariffs on steel and aluminum imports to 50%, starting Wednesday. President Trump also alleged that China violated the trade truce agreed in mid-May, a claim that China has denied. The Chinese Ministry of Commerce issued a statement on Monday rejecting the U.S. president’s claim and said that it is the U.S. side that has “seriously undermined” the consensus reached in Geneva. U.S. Treasury Secretary Scott Bessent said over the weekend that President Trump and Chinese President Xi Jinping will speak soon to resolve trade issues, including a dispute over critical minerals.

“We expect the markets to remain headline-driven, especially headlines related to tariffs. As we start to see more clarity on trade, we expect more traditional drivers of markets, like earnings and fundamentals, to lead the way and drive sentiment,” said Clark Bellin at Bellwether Wealth.

This week, investors look ahead to comments from Federal Reserve Chair Jerome Powell and other Fed officials, earnings reports from several high-profile companies, as well as a slew of U.S. economic data, with a particular focus on Friday’s nonfarm payrolls report.

In Friday’s trading session, Wall Street’s major equity averages closed mixed. Ulta Beauty (ULTA) surged over +11% and was the top percentage gainer on the S&P 500 after the beauty retailer posted upbeat Q1 results and raised its full-year guidance. Also, Zscaler (ZS) climbed more than +9% and was the top percentage gainer on the Nasdaq 100 after the cybersecurity company reported stronger-than-expected FQ3 results and boosted its annual guidance. In addition, Palantir Technologies (PLTR) gained over +7% after the New York Times reported that the Trump administration had expanded the company’s work across the federal government in recent months. On the bearish side, Regeneron Pharmaceuticals (REGN) plummeted more than -19% and was the top percentage loser on the S&P 500 and Nasdaq 100 after a late-stage trial of its experimental chronic obstructive pulmonary disease treatment for former smokers, itepekimab, failed to meet its primary endpoint.

Data from the U.S. Department of Commerce released on Friday showed that the core PCE price index, a key inflation gauge monitored by the Fed, came in at +0.1% m/m and +2.5% y/y in April, in line with expectations. Also, U.S. April personal spending rose +0.2% m/m, in line with expectations, while personal income grew +0.8% m/m, stronger than expectations of +0.3% m/m. In addition, the University of Michigan’s U.S. consumer sentiment index was revised higher to 52.2 in May, stronger than expectations of 51.1. At the same time, the U.S. May Chicago PMI unexpectedly fell to 40.5, weaker than expectations of 45.1.

Fed Governor Christopher Waller said on Monday he still sees a path to interest rate cuts later this year, given his expectations that tariffs will raise unemployment and temporarily push up inflation. “Assuming that the effective tariff rate settles close to my lower tariff scenario, that underlying inflation continues to make progress to our 2% goal, and that the labor market remains solid, I would be supporting ‘good news’ rate cuts later this year,” Waller said.

Meanwhile, U.S. rate futures currently price in about two interest rate cuts this year, with the first reduction not expected until October, according to LSEG data.

The U.S. May Nonfarm Payrolls report will be the main highlight this week, as investors assess the extent to which tariffs are affecting jobs and what implications that may have for interest rates. Another key data set for gauging the impact of tariff uncertainty on business activity and confidence will be the latest ISM figures on manufacturing and services sector activity. Other noteworthy data releases include the U.S. JOLTs Job Openings, Factory Orders, ADP Nonfarm Employment Change, Crude Oil Inventories, Initial Jobless Claims, Trade Balance, Nonfarm Productivity, Unit Labor Costs, Average Hourly Earnings, the Unemployment Rate, and Consumer Credit.

“With so many soft indicators pointing to a slump, modest confirmation of a slowdown from hard data should be enough to put cuts on the table,” Steve Englander said in a note, global head of G-10 FX research at Standard Chartered.

Market watchers will also monitor earnings reports from several high-profile companies, with Broadcom (AVGO), CrowdStrike (CRWD), Hewlett Packard Enterprise (HPE), Lululemon Athletica (LULU), and Dollar Tree (DLTR) scheduled to report their quarterly results this week.

In addition, the Fed will release its Beige Book survey of regional business contacts this week, which provides an update on economic conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

Fiscal legislation in Washington will draw attention this week as well. The Senate will begin deliberations on a tax-and-spending bill that was passed by the House of Representatives last month.

Today, investors will focus on remarks from Fed Chair Jerome Powell, who is scheduled to speak at the Federal Reserve Board’s International Finance Division 75th anniversary conference. Market participants will also parse comments from other Fed officials, including Logan, Goolsbee, Cook, Bostic, Kugler, and Harker, throughout the week.

On the economic data front, all eyes are on the U.S. ISM Manufacturing PMI, which is set to be released in a couple of hours. Economists, on average, forecast that the May ISM manufacturing PMI will be 49.3, compared to the April figure of 48.7.

The U.S. S&P Global Manufacturing PMI will also be reported today. Economists expect the final May figure to be unrevised at 52.3.

U.S. Construction Spending data will be released today as well. Economists foresee this figure coming in at +0.4% m/m in April, compared to -0.5% m/m in March.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.445%, up +0.68%.

The Euro Stoxx 50 Index is down -0.50% this morning as escalating global trade tensions dampened sentiment. Automobile stocks plunged on Monday after U.S. President Trump announced plans to double tariffs on imported steel and aluminum, and fresh data showed a steep drop in French car registrations in May. Luxury and technology stocks also lost ground. The European Union criticized Trump’s new tariff plans, warning that they jeopardize efforts to reach a “negotiated solution” in the ongoing trade dispute. “The EU is prepared to impose countermeasures,” a spokesman said. Meanwhile, market participants are awaiting the European Central Bank’s rate-setting meeting later in the week. The ECB is widely expected to lower the deposit rate by another 25 basis points to 2.00% on Thursday. Investors will likely focus on signals about future moves and on projections that President Christine Lagarde will present. On the economic front, a survey released on Monday showed that the downturn in Eurozone manufacturing eased further in May, nearing stabilization as output rose for a third straight month. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said, “The upward trend in the headline PMI is still continuing, pointing towards a recovery that is progressing.” In corporate news, Sanofi (SAN.FP) fell over -1% after the French pharmaceutical group agreed to acquire U.S.-based Blueprint Medicines Corporation for up to $9.5 billion.

Eurozone’s Manufacturing PMI data was released today.

Eurozone May Manufacturing PMI came in at 49.4, in line with expectations.

Japan’s Nikkei 225 Stock Index (NIK) closed down -1.30%, while mainland China’s financial markets were closed for a holiday.

Japan’s Nikkei 225 Stock Index closed lower today as U.S. President Donald Trump’s fresh tariff threats and renewed U.S.-China trade tensions weighed on sentiment. Electronics and technology stocks led the declines on Monday. Automobile stocks also slumped as the yen strengthened on demand for haven assets. A private-sector survey released on Monday showed that Japan’s factory activity contracted at the slowest rate in five months in May as the drop in new orders moderated, but concerns over U.S. tariffs have clouded the recovery from an almost year-long downturn. Separately, finance ministry data showed that capital spending by Japanese firms surged to a record high in the first quarter, driven by industries catering to domestic demand, while key export-oriented sectors cut back on investment, signaling that U.S. tariffs are weighing on business confidence. Meanwhile, Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, stated on Monday that the latest PMI data indicate that manufacturing conditions in Japan edged closer to stabilization last month. In other news, Reuters reported on Monday that Japan plans to raise its 2030 foreign direct investment target by 20% and boost the figure to as much as 150 trillion yen ($1.05 trillion) by mid-decade. In corporate news, Sumitomo Realty & Development gained over +2% after a filing revealed that activist investor Elliott International acquired a 2.99% stake in the property developer. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +5.69% to 25.09.

The Japanese May au Jibun Bank Manufacturing PMI stood at 49.4, stronger than expectations of 49.0.

The Japanese Capital Spending came in at +6.4% y/y in the first quarter, stronger than expectations of +3.8% y/y.

China’s Shanghai Composite Index was closed today for the Dragon Boat Festival holiday. Mainland China’s financial markets will reopen on Tuesday, June 3rd.

Pre-Market U.S. Stock Movers

Tesla (TSLA) fell over -1% in pre-market trading after data showed that the company’s new car sales in Portugal, Denmark, and Sweden plunged in May from a year earlier.

Steel and aluminum stocks surged in pre-market trading after U.S. President Donald Trump said he would double tariffs on steel and aluminum imports to 50%. Cleveland-Cliffs (CLF) soared over +26%, Steel Dynamics (STLD) surged more than +13%, and Nucor (NUE) jumped over +12%.

Blueprint Medicines (BPMC) jumped more than +27% in pre-market trading after France’s Sanofi agreed to acquire the company for up to $9.5 billion.

Moderna (MRNA) climbed over +7% in pre-market trading after the FDA approved its next-generation COVID-19 vaccine, mNexspike, for use in adults 65 and older or individuals aged 12 to 64 with at least one underlying coronavirus risk factor.

Boeing (BA) rose more than +1% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a $260 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - June 2nd

Credo Technology Holding (CRDO), Campbell Soup (CPB), Science Applications (SAIC).