The Dow Jones Industrial Average faced a downturn amid escalating trade tensions between the U.S. and China, though stocks like Nvidia and UnitedHealth bucked the trend with some gains. Steel companies also saw an uptick following President Trump’s announcement of increased tariffs on the sector. Meanwhile, Treasury Secretary Scott Bessent worked to allay concerns regarding U.S. national debt.
In early trading, the Dow underperformed compared to other major indexes, dropping nearly 200 points (about 0.4%). UnitedHealth stood out, gaining close to 2%, although it is still down approximately 39% year-to-date. Nvidia followed suit with a modest rise of nearly 1%.
Among the notable laggards, 3M saw a decline of almost 2%, while Salesforce and Sherwin-Williams fell more than 1%. Contrarily, the Nasdaq composite registered the smallest dip, down just 0.1%, remaining well above its key moving averages. Grail experienced a significant jump of over 7%, while Zscaler rose nearly 5%. However, CDW, a major IT supplier to the government, dropped around 3%, and Atlassian fell more than 2%.
The S&P 500 was also down, falling 0.3%, with most sectors showing weakness. Energy stocks made gains, while real estate and consumer discretionary sectors lagged. Gold mining company Newmont saw a notable increase of nearly 6%. Broadcom, a key player in the semiconductor industry, rose nearly 3%, capitalizing on favorable market conditions. In contrast, First Solar struggled with a drop of more than 4%, and Ford faced challenges, slipping nearly 4%.
Small-cap stocks on the Russell 2000 index dipped slightly, down 0.3%, continuing to trail their 200-day moving average. Nonetheless, growth stocks outperformed, with the Innovator IBD 50 ETF up by 0.3%, marking a year-to-date gain of just over 4%.
In a bid to address rising debt concerns, Treasury Secretary Bessent reassured the public during an interview, emphasizing that the U.S. would never default on its debt obligations. He dismissed predictions from financial leaders about potential cracks in the bond market, pointing out that such claims have historically proven unfounded. The debt ceiling discussions are now tightly linked to the current tax and spending legislation progressing through Congress.
Meanwhile, China responded to U.S. accusations of violating a temporary trade agreement by asserting that the U.S. has also broken terms, particularly concerning technology export controls. Beijing threatens to implement strong measures to protect its interests in this matter, while the U.S. remains focused on China’s restrictions affecting critical materials for manufacturing electric vehicles and other technology.
On the stock performance front, steel companies notably reacted positively to Trump’s announcement of doubling tariffs to 50% on imports. This move is aimed at bolstering the domestic steel industry, with Nucor surging nearly 10% and Cleveland-Cliffs rocketing upward by 25%. However, both companies face challenges, with projections indicating losses in the near term.
Steel Dynamics is testing its entry point after planning for earnings growth in the coming years, despite currently facing a low composite rating. The VanEck Steel ETF also saw a surge, rising more than 3%. Despite the gains, steel stocks have struggled in a long-term downtrend, with the U.S. relying heavily on imports to meet its steel demands.
In the current market landscape, investors are advised to stay vigilant and look for signs of stability amidst the fluctuating trends in various sectors.
