Full Market Coverage HereMajor Indexes Pull Back After Strong May Performance
Major U.S. stock indexes retreated on Monday, June 2, 2025, as renewed trade tensions between the United States and China dampened investor sentiment. The pullback follows an exceptionally strong performance in May, when all three major indexes posted significant gains.
The S&P 500 declined 0.49 points (-0.01%) to close at 5,876.62, while the Dow Jones Industrial Average fell 54.34 points (-0.13%) to 42,076.04. The tech-heavy Nasdaq Composite dropped 22.96 points (-0.11%) to 21,205.74.
Today’s market retreat comes after China pushed back against U.S. accusations that it had violated the Geneva trade agreement, instead blaming Washington for failing to uphold the deal. This development signals deteriorating negotiations between the world’s two largest economies following a brief pause after U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng had agreed to a 90-day suspension of most tariffs.
May’s Stellar Performance Sets High Bar
Despite today’s pullback, May was an exceptional month for U.S. equities:
– The S&P 500 climbed 6.15% in May, breaking a three-month losing streak with its best monthly performance since November 2023
– The Dow Jones Industrial Average rose 3.94%, also ending a three-month losing streak
– The Nasdaq Composite surged 9.56%, marking its best monthly performance since November 2023 and its second consecutive positive month
– The Russell 2000 moved 5.2% higher, breaking a three-month losing streak
Market analysts attribute May’s strong performance to resilient U.S. economic data and stronger-than-expected corporate earnings, particularly from technology companies. The first-quarter earnings season, which concluded last week with Nvidia’s report, was described by Evercore ISI as “a blowout” with S&P 500 earnings growth of 13.1% and sales growth of 5.0%.
Tech Sector Remains in Focus
Technology stocks continue to drive market movements, with the “Magnificent Seven” tech giants playing a particularly influential role. According to MarketBeat’s stock screener, NVIDIA (NVDA), Meta Platforms (META), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Broadcom (AVGO), and Advanced Micro Devices (AMD) were the seven technology stocks with the highest dollar trading volume in recent days.
Tesla (TSLA) and Nvidia (NVDA) were standout performers in May, with gains of 22.79% and 24.06% respectively. However, both stocks remain in negative territory for 2025 to date, with Tesla down 8.65% and Nvidia down 2.3% since the start of the year.
Apple (AAPL) had a challenging May, dipping 5.48%, while other tech giants posted solid gains: Alphabet’s Class A shares rose 8.15%, Amazon (AMZN) gained 11.6%, Microsoft (MSFT) climbed 16.47%, and Meta (META) jumped 17.94%.
After-Hours Movers and Market Outlook
In after-hours trading, technology stocks continued to see volatility as investors positioned themselves ahead of several key earnings reports scheduled for this week.
Market sentiment remains cautious as National Economic Council director Kevin Hassett suggested that President Donald Trump and China’s President Xi Jinping could have a conversation about trade as soon as this week, potentially impacting market direction.
Morgan Stanley’s Chris Toomey expressed skepticism about whether May’s market momentum would continue, stating, “We’re probably still range-bound. The concern we’ve got is that while I think we’ve taken out the worst-case scenario with regards to the ‘liberation day’ tariffs, we’re in a situation where I think the market’s right now probably pricing in the best-case scenario.”
Upcoming Earnings and Economic Events
Investors are looking ahead to several significant earnings reports this week that could move markets:
– Tuesday, June 3: Dollar General (DG), Nio (NIO), CrowdStrike (CRWD), and Hewlett Packard Enterprise (HPE)
– Wednesday, June 4: ChargePoint (CHPT) and MongoDB (MDB)
– Thursday, June 5: Broadcom (AVGO) and DocuSign (DOCU)
Broadcom’s report on Thursday will be particularly closely watched given its position as a major semiconductor company and its recent stock performance, with shares up 0.30% on May 30 and an impressive 83.17% gain over the past year.
Trade Tensions and Legal Developments
President Donald Trump’s tariffs have been in legal limbo following two key court rulings last week. The U.S. Court of International Trade initially struck down the reciprocal tariffs, only for an appeals court to temporarily reinstate them.
These legal developments, combined with the renewed tensions between the U.S. and China, continue to create uncertainty in the markets. Evercore ISI noted that despite the strong earnings season, the market rally has occurred despite uncertainty around President Trump’s proposed tax bill.
Market Valuation and Outlook
The S&P 500 is currently trading at 21 times earnings projected over the next 12 months, up from a low of 18 times in April and well above the average of 18.6 times over the past decade, suggesting stocks may be somewhat richly valued at current levels.
Looking ahead, analysts from Evercore ISI suggest that while the market may face elevated volatility in June, investors don’t need to worry about revisiting the stock market’s lows. “We think there’s going to be further runway, but we don’t think there’s going to be a recession,” said Julian Emanuel, Evercore ISI senior managing director.
As markets navigate the complex landscape of trade tensions, strong corporate earnings, and potential policy changes, investors will be closely monitoring this week’s earnings reports and any developments in U.S.-China trade relations for signals about the market’s next direction.