U.S. stocks pared losses Monday after a weak morning as gains in technology stocks bolstered the Nasdaq. On the first trading day of the third quarter, the S&P 500 flipped in and out of negative territory while the blue-chip Dow almost erased most of its 100-point deficit.
Worries over trade tensions between the U.S. and its major trading partners lingered, weighing on investors’ sentiment.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.15%[1] fell 51 points, or 0.2%, to 24,222. The S&P 500 SPX, +0.30%[2] shed less than a point to 2,717 and the Nasdaq Composite Index COMP, +0.76%[3] reversed an earlier drop to rise 32 points, or 0.4%, to 7,542.
Read: Which markets are closed for July Fourth?[4]
What’s driving markets?
Recent trading has been driven by uncertainty over trade policy, with investors seeking clarity about potential protectionist changes to U.S. policies and how they could be met by retaliatory measures. A trade war is seen as providing a significant headwind to global growth.
On Sunday, President Trump said he sees his threat to impose global auto tariffs as his biggest weapon[5] to extract concessions from trading partners. At the same time, he called the EU “as bad as China” in hindering U.S. trade.
Meanwhile, a Financial Times report[6] on Sunday said the European Union has threatened $300 billion in fresh tariffs against U.S. products if Trump follows through on his threatened 20% levies targeting the trade bloc’s auto makers. And Canadian retaliatory tariffs took effect Sunday[7], with those measures serving as a response to U.S. metals tariffs.
In another significant question mark, Axios reported that the Trump administration had crafted a draft bill[8] that would declare America’s abandonment of World Trade Organization rules. This would essentially give Trump a license to raise tariffs at will, without congressional consent and largely outside of the international rules governed by the WTO.
Trading may be volatile this week, as some market participants will be out of the office for the Fourth of July holiday, for which markets will be closed on Wednesday. Lower trading volume can exacerbate day-to-day swings.
Don’t miss: Trade-war fears? These lower-risk stocks are weathering the market storms[9]
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