Investing.com -- S&P 500 wrapped up May with its biggest monthly gain in 18 months after cutting the bulk of its losses Friday as chip stocks including Nvidia were pressured rising U.S. China trade tensions.
At 12:55 ET (16:55 GMT), the Dow Jones Industrial Average rose 54 points, or 0.1%, the S&P 500 index dropped 0.1%, and the NASDAQ Composite slipped 0.1%. The S&P 500 racked up a 5.8% gain for May, the biggest since the 9.5% in November 2023.
Nvidia leads tech lower on fears of further U.S. regulatory crackdown on China tech
NVIDIA Corporation (NASDAQ: NVDA ) fell nearly 3% on fears of further regulatory crackdown on China that could just as U.S.-China trade tensions heat up. Earlier this week, Nvidia flagged an $8 billion hit from lost chip sales to China due to the U.S. ban on chip exports to China.
The Trump administration plans to widen restrictions on China’s tech sector with new regulations aimed at subsidiaries of companies under US curbs, Bloomberg reported, citing sources.
The sanctions would aim to Chinese tech firms that are already blacklisted from creating subsidiaries to skirt the current government restrictions on licensing requirements.
The update added to U.S.-China tensions, which were ratcheted up after Trump on Friday accused China of breaking a recent trade agreement.
In a post on Truth Social, Trump wrote: “China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US.”
He added: “So much for being Mr. NICE GUY!”
It was unclear what the president was refering to, but followed U.S. Treasury Secretary Scott Bessent stating that trade negotiations between the two countries had stalled, adding that a personal intervention from President Trump may be needed to ensure progress.
"I believe we may at some point have a call between the president and party Chair Xi," Bessent said. "Given the magnitude of the talks, given the complexity ... this is going to require both leaders to weigh in with each other."
Earlier this month, the U.S. and China agreed to reduce or suspend several tariffs, with the U.S. lowering duties on Chinese imports from 145% to 30% and China cutting its retaliatory tariffs from 125% to 10%.
The agreement also included a 90-day suspension of additional tariffs.
Appeals court reinstates Trump tariffs
Stock markets had already traded lower after an appeal court had allow President Trump’s tariffs to remain in place until next week, just a day after a federal trade court ordered Trump to immediately cease his tariffs.
The trade court ruling had ramped up hopes that Trump will be forced to taper his tariff agenda, which could present lesser economic disruption from higher trade duties.
However, the appeals court ruling now adds to the general tone of wariness, with the next hearing on the case scheduled for June 5, further pushing out decisions on hiring, spending or cutting rates.
PCE points to easing inflationary pressures
The April personal consumption expenditures (PCE) price index, an inflation metric closely monitored by the Federal Reserve, pointed to further easing inflationary pressures in the U.S., potentially offering the Federal Reserve room to ease monetary policy once more.
The PCE price index recorded a 2.1% annual increase during the month, the lowest since February 2021, while the widely-watched "core" metric, which strips out more volatile items like food and fuel, came in at 2.5% annually, below February’s 2.6%.
The U.S. economy contracted at an annual rate of 0.2% in the first quarter, according to data released Thursday, suggesting that the Trump administration’s chaotic trade policies are hampering economic growth in the world’s largest economy.
Gap slumps after hefty tariff hit
There are more corporate results to digest Friday,.
Gap (NYSE: GAP ) stock slumped after the clothing retailer delivered another strong quarterly earnings beat, but said tariffs could cost the company between $100 million and $150 million with mitigation efforts.
Ulta Beauty (NASDAQ: ULTA ) stock soared after the cosmetics company boosted its full-year outlook after beating first-quarter expectations, signalling that shoppers are keeping up with non-essential beauty purchases.
Dell Technologies (NYSE: DELL ) stock rose after the tech giant lifted full-year earnings guidance despite reporting mixed Q1 results as earnings missed estimates on a tariffs-related hit to demand.
American Eagle (NYSE: AEO ) Outfitters (F: AEOS ) stock fell after the retailer forecast second-quarter revenue below estimates after reporting a wider-than-expected quarterly loss, due to rising input costs and sluggish demand.
Peter Nurse, Ambar Warrick contributed to this article.