Stock Market News Review: SPY, QQQ Dip as U.S.-China Tensions Flare, Consumer Sentiment Ends Losing Streak

Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) closed the Friday session well above their afternoon lows, although the benchmark indices were unable to finish in the green ahead of the weekend.

This morning, President Trump accused China of violating the preliminary trade deal reached by the countries in Geneva. He didn’t dive into the specifics, though he later said in an Oval Office press conference that he would like to speak with China President Xi Jinping about the situation. “Hopefully we’ll work that out,” said Trump.

U.S. Trade Representative Jamieson Greer provided more details, saying that China was moving too slowly in removing tariff countermeasures and that it hadn’t progressed in removing export restrictions on rare earth metals used in products like vehicles and semiconductors.

The market sunk lower during the afternoon after Bloomberg reported that the U.S. is preparing sanctions on subsidiaries of Chinese technology companies included in the Entity List. Sources close to the matter added that the U.S. will likely enforce additional restrictions following the subsidiary sanctions in a sign of escalation between the two world powers.

Aside from trade updates, the University of Michigan’s May Index of Consumer Sentiment tallied in at 52.2, beating the expectation for 51.0 and ending four consecutive months of falling sentiment. The reading remained unchanged from April and was much higher than the preliminary May reading of 50.8 as a result of the U.S.-China preliminary trade agreement.

On top of that, the core personal consumption expenditures (PCE) index for April tallied in at 2.5%, meeting expectations and falling from 2.7% in March. The index is the Fed’s preferred inflation gauge and excludes food and energy prices included in the PCE index because of their volatility.

The S&P 500 ended the day just barely lower with a 0.01% loss while the Nasdaq 100 fell by 0.11%. At the same time, May turned out to be quite a memorable month, as both indexes registered their strongest monthly performance since November 2023.