Stock Market Today: Markets Drift Lower as Trade Tensions and Manufacturing Concerns Weigh on Investors

Major Indexes Retreat in Midday Trading as Oil Prices Surge

U.S. stocks are drifting lower in midday trading on Monday, June 2, 2025, as investors digest disappointing manufacturing data and renewed trade tensions between the United States and China. As of 11:30 a.m. Eastern time, the Dow Jones Industrial Average was down 236 points, or 0.6%, the S&P 500 was 0.3% lower, and the Nasdaq Composite was down less than 0.1%.

The market retreat follows a strong performance in May, when the S&P 500 climbed 6.15%, the Dow Jones Industrial Average rose 3.94%, and the Nasdaq Composite surged an impressive 9.56% – marking their best monthly gains since November 2023.

Today’s decline comes after the Institute for Supply Management reported that U.S. manufacturing activity contracted more than economists expected last month. The disappointing data has raised concerns about the impact of President Donald Trump’s trade policies on American businesses.

“The impact of ever-changing trade policies of the current administration has wreaked havoc on suppliers’ ability to react and remain profitable,” noted one company in the transportation equipment industry in the ISM survey.

Trade Tensions Reignite Between U.S. and China

Market sentiment has been further dampened by escalating rhetoric between the United States and China. Just weeks after the two countries agreed to pause many of their tariffs, China has accused the U.S. of violating the consensus reached during trade discussions in Geneva last month.

China’s Commerce Ministry specifically cited U.S. actions including issuing AI chip export control guidelines, stopping the sale of chip design software to China, and plans to revoke Chinese student visas as violations of their agreement.

This follows President Trump’s announcement on Friday that he would double tariffs on steel imports to 50% and aluminum tariffs to 50%, effective Wednesday, June 4. The move has boosted U.S. steelmaker stocks, with Nucor jumping 9.7% and Steel Dynamics rallying 10%, while hurting automakers and other metal users, with General Motors down 4.6% and Ford falling 4.5%.

Oil Prices Jump Amid OPEC+ Decision and Geopolitical Tensions

In the energy sector, oil prices have climbed approximately 3% today despite OPEC+ announcing increased production. A barrel of U.S. crude rose to $62.61, while Brent crude, the international standard, gained 3.1% to $64.71.

Analysts attribute the price increase to market expectations already factoring in the production increase, as well as heightened uncertainty following Ukraine’s attacks in Russia over the weekend, which raised concerns about potential disruptions to global oil and gas flows.

Upcoming Market Events to Watch

Investors are looking ahead to several key economic reports and corporate earnings releases this week. Tomorrow will bring factory orders and job openings data, with Federal Reserve Governor Lisa Cook scheduled to speak.

On the earnings front, notable companies reporting this week include NIO (NIO), CrowdStrike (CRWD), and Hewlett Packard Enterprise (HPE) on Tuesday, followed by MongoDB (MDB) on Wednesday. Thursday will see reports from Broadcom (AVGO), DocuSign (DOCU), and Lululemon Athletica (LULU).

Treasury Yields Rise on Deficit Concerns

In the bond market, Treasury yields continued their upward trend as concerns persist about increasing U.S. government debt due to tax cut plans and growing deficits. The yield on the 10-year Treasury rose to 4.45% from 4.41% late Friday and from just 4.01% roughly two months ago – a significant move that could impact borrowing costs for businesses and consumers.

Looking Ahead

As the first trading day of June unfolds, market participants remain cautious about the potential economic impact of trade policies and manufacturing weakness. The week ahead features critical economic data including the ADP employment report on Wednesday and the highly anticipated U.S. employment report on Friday, which could provide further insights into the health of the economy and influence Federal Reserve policy decisions.

With markets having posted strong gains in May, investors will be watching closely to see if the current pullback represents a temporary pause or the beginning of a more significant correction.