Dow, S&P 500, Nasdaq slip as U.S.-China trade tensions linger

Stocks opened lower on Monday, June 2 as investors began the new month on fresh jitters amid the ongoing trade tensions between the United States and China.

Global stocks saw some downside action as Asian and European markets closed lower and U.S. stocks slipped. For the major U.S. indices, the Dow Jones Industrial Average dropped 160 points. Investor jitters also saw the S&P 500 pull back 0.4% and Nasdaq Composite open 0.5% down.

A resilient stock market ended May in bullish territory despite the notable tariff-driven downswings that punctuated sentiment throughout the month.

Dow edged 4% higher in May, while Nasdaq led the gains with 9% over the month amid some huge earnings-driven performances. Perhaps more notably was the S&P 500 marching to its best May performance since 1990, and the best overall month since November 2023.

Tailwinds that pushed stocks higher also catalyzed gains for cryptocurrencies, with Bitcoin (BTC) storming to its all-time high above $111k. However, like the broader risk assets market, Bitcoin price is down and near $104k. 

Across the market, the U.S. dollar fell slightly and gold rose as flight to safe haven assets reemerged. 

Meanwhile, oil prices jumped following news that OPEC+ plans a much smaller hike in output than the market anticipated. On Saturday, OPEC+, encompassing a group of global oil producers, announced an increase of 411,000 barrels of oil a day.

The latest pullback for stocks comes as investors weigh ongoing U.S.-China trade tensions. Last week, U.S. President Donald Trump spooked investors when he threatened to increase tariffs on steel and aluminum imports from 25% to 50%. It followed Trump’s claim that China had “violated” the trade agreement recently agreed in Geneva, Switzerland.

But China has hit back, noting the U.S. has failed to honor its part of the deal.

This fresh escalation threatens to inject negative sentiment in the market.  While Trump’s tax bill is in focus this week amid a series of data releases, tariffs will likely be among top factors to watch. Eyes will also be on the geopolitical front after Ukraine’s drone strikes against Russia. 

Despite these factors, Tom Lee, co-founder and managing partner of Fundstrat, is bullish on the S&P 500.

Lee shared his outlook with CNBC’s ‘Squawk Box’, noting that the index has a higher chance of hitting 6,600 going forward than it was in February. The S&P 500 hovers around 5,911, up from 4,982 in early April. It topped around 6,144 in February 2025.