By Quasar Elizundia, Expert Research Strategist at Pepperstone
May 31, 2025:
“U.S. equities are set to close Friday’s session under downward pressure, with the S&P 500 falling approximately 0.4%. Despite this negative close, the week is on track to end with positive results, reflecting a mixed and cautious tone across markets.
The pressure seen in the final session of the week stems largely from the resurgence of trade uncertainty, triggered by recent legal decisions surrounding the Trump istration’s tariff policies. Although the U.S. Court of International Trade ruled midweek against the broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA), a subsequent federal order temporarily reinstated these trade measures while an appeal proceeds. This reinstatement, coupled with former President Trump’s accusations that China had “totally violated” the trade agreement with the U.S., has rekindled concerns in financial markets.
This return of trade tensions coincides with mixed U.S. economic data, particularly concerning April consumer spending. The figure showed a significant slowdown, rising only 0.2% compared to March’s 0.7%, highlighting consumer caution amid expectations of higher costs due to escalating tariffs. Specifically, spending on goods fell 0.1%, affected by weaker demand for durable goods such as vehicles, clothing, and recreational items, while spending on services maintained a moderate pace of growth.
Even though Friday ends on a down note, U.S. equities close May with solid gains. The S&P 500 has posted a 6% monthly increase, while the Nasdaq has risen an impressive 10%. These positive May results were partially driven by optimism surrounding the recent U.S.-UK trade agreement reached earlier in the month.
However, trade uncertainty remains a looming threat that could significantly dampen risk appetite in the near term, leaving markets exposed to new developments and headlines.
From a technical standpoint, this session, showing limited progress, continues to raise uncertainty about whether a lower high may be forming. Therefore, caution should dominate trader sentiment, with a preference for clearer confirmations before taking aggressive positions.
In sum, U.S. equities end the trading week cautiously, remaining alert to global trade dynamics and their implications for the U.S. economy.”