Stocks shook on Friday as markets responded to the latest flare-up in trade tensions between the US and China.
The US’s major inflation gauge was cooled in April, but President Donald Trump has argued that China violated the two-nation trade agreement.
The Dow Jones industrial average fell by more than 120 points, while the benchmark S&P 500 fell by 0.6%. The tariff fiasco that saw fresh drama on Thursday as federal court suspended the block on Trump’s tariffs has also stalled, falling 0.4% after closing the greens on Thursday amid the profits of Global Chip Giant Nvidia.
On Friday, the data showed the April Personal Consumption Expense Index, which rose 2.5% each year in April, a closely monitored inflation gauge, the lowest read since March 2021. The PCE index met economists’ expectations by 2.5%, lower than the 2.7% recorded in March.
Overall, PCE rose 2.1% per year, down from economists’ expectations of 2.2%. Over generations, core prices have risen by 0.1%, in harmony with the numbers seen in March.
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A softer inflation reading means good news for risky assets, including stocks and cryptocurrencies, but investors’ sentiment is overwhelmed by fresh tariff uncertainty.
This has previously said US-China trade talks have “a bit stagnant,” following President Trump’s claim that China has “completely violated” the trade deal with US Treasury Secretary Scott Bescent.
“I quickly traded with China to save them from what I thought would be in a very bad situation. I didn’t want to see it happen,” Trump wrote about the true society. “Because of this transaction, everything quickly stabilized and China returned to business as usual. Everyone was happy! That’s good news!!! The bad news is that perhaps not surprising people are completely violating us.
More tariff drama is expected after the US Court of Appeal suspends the International Trade Court’s ruling on Trump’s global tariffs. The White House has also shown it is ready to head to the Supreme Court, with experts warning that most of the tariffs are ordering courts an order that threatens the $2 trillion hole in Trump’s fiscal plan.
Despite tariff uncertainty, US stocks look closer to the monthly greenery. The NASDAQ is ready for 10% spikes for a month, and the S&P 500 is on track with a 6% jump every month. Meanwhile, the Dow could be up 4% in May.
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