US Markets & Economy: Trade Tensions Mount as Consumer Spending Shows Resilience

S&P 500 futures were marginally lower Monday night. Futures for the overall index lower about 0.36%, while Nasdaq 100 futures lower by 0.54%. Dow Jones Industrial Average futures is lower 102 points.

Points to Know Before Market Opens

US stock futures dropped Monday, starting June with a dip after a strong May for equities. The S&P 500, Nasdaq, and Dow all saw significant gains last month. Investors are now watching escalating trade tensions closely, with renewed US-China friction, Trump's threat of 50% steel tariffs, and a court's hold on existing import duties. This Friday's May jobs report will shed light on the economy's performance amidst these volatile trade policies.

The US-China trade truce appears to be cracking. Both nations are accusing each other of violating their agreement. China points to US export restrictions on semiconductors and student visa revocations, while Trump previously blamed China for breaches. This exchange creates uncertainty, despite earlier talks of a potential trade conversation between Trump and Xi Jinping.

Beyond China, steel trade tensions are also rising. President Trump recently threatened a 50% tariff on steel imports, effective Wednesday, aiming to "further secure" the US steel industry. This follows his approval of the US Steel and Nippon merger. The European Union has criticized this move, deeming it detrimental to trade agreements and is prepared to impose countermeasures.

Amidst these trade conflicts and concerns about US fiscal health, long-term bond yields have been volatile, making short-term Treasuries appealing. Warren Buffett's Berkshire Hathaway holds a significant stake, and other investors are following suit, as seen in high investor flows into relevant ETFs.

In the airline industry, competition for high-income travelers is driving more luxurious business class offerings. American Airlines, for example, will debut upgraded "suites" with enhanced privacy and amenities. This focus on premium seating aims to bolster airline profit margins as domestic coach seat demand declines.

The 10-year Treasury yield increased by 0.018 points at 4.436%. The 2-year Treasury increased by 0.004 points at 3.918%.