June 4, 2025

The Pluse: Global Economic and Market News for Wednesday, June 4, 2025

U.S. and global markets ended mixed on June 4, 2025, as investors digested new tariff hikes, weak economic data, and a cautious global growth outlook. While technology stocks continued to support the major indices, concerns about escalating U.S.-China trade tensions and slowing economic momentum weighed on sentiment. The Organization for Economic Cooperation and Development (OECD) and other forecasters trimmed their global growth projections, citing the ongoing trade conflict as a significant headwind.

Market Performance and Key Drivers

• The S&P 500 finished flat, the Nasdaq Composite edged slightly higher, and the Dow Jones Industrial Average snapped a four-day winning streak, closing modestly lower. Technology stocks, led by Nvidia and Hewlett Packard Enterprise, provided support while other sectors lagged.

• Hewlett Packard Enterprise shares surged nearly 6% after the company reported strong demand for AI servers and hybrid cloud products, beating Wall Street’s revenue and profit expectations. Nvidia gained 1%, and other chipmakers such as Broadcom and AMD also advanced.

• In contrast, CrowdStrike Holdings fell nearly 7% after issuing a weaker-than-expected revenue outlook, reflecting some caution in the cybersecurity sector.

• Wells Fargo shares rose 3.6% after the Federal Reserve lifted a longstanding asset cap, signaling regulatory progress for the bank.

Tariffs and Trade Policy

• President Donald Trump signed an executive order, effective June 4, doubling tariffs on steel and aluminum imports from 25% to 50%. The move, part of an ongoing strategy to pressure trading partners, comes ahead of anticipated talks with Chinese President Xi Jinping. The White House has indicated that additional punitive tariffs could take effect in early July if negotiations do not yield progress.

• The latest tariff escalation has heightened tensions between the U.S. and China, with global investors closely watching for signs of a breakthrough or further deterioration in trade relations.

Economic Data and Outlook

• U.S. economic data disappointed: The ADP Employment Change report for May showed only 37,000 new private sector jobs, the weakest since March 2023 and well below expectations. The ISM Services PMI for May contracted to 49.9, marking the first contraction in nearly a year and signaling weakness in the services sector.

• The U.S. Bureau of Economic Analysis reported that real GDP contracted at a 0.2% annual rate in the first quarter of 2025, reflecting a surge in imports and weaker government spending. While consumer spending and investment provided some offset, the overall picture points to slowing momentum.

• Weak data has increased market expectations for Federal Reserve rate cuts, with over 50 basis points of easing now priced in by year-end. President Trump has publicly urged the Fed to lower rates to support growth.

• Gold prices rose as investors sought safe-haven assets, while the U.S. dollar weakened and the Japanese yen strengthened amid risk aversion.

Global Growth and Policy Responses

• The OECD lowered its global growth forecast to 2.9% for both 2025 and 2026, down from earlier projections, citing the negative impact of the U.S.-led trade war. The group warned that further tariff increases or prolonged policy uncertainty could further reduce growth and raise inflation, especially in countries implementing new trade barriers.

• Central banks are taking divergent approaches: The European Central Bank is expected to cut rates this week, while the Bank of Canada held steady, citing inflation concerns and U.S. trade policy as key risks. The Bank of Japan has signaled further rate hikes to combat domestic inflation.

Outlook

• Investors remain focused on upcoming economic data—including Friday’s U.S. jobs report—and potential developments in U.S.-China trade talks. With volatility expected to persist, analysts caution that the market’s recent calm may give way to renewed turbulence if trade tensions escalate or economic data continues to disappoint.

Disclosure

This article is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any securities. All information is based on publicly available sources as of June 4, 2025. The author holds no positions in the securities mentioned. Readers should consult financial professionals before making investment decisions.

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The Pluse: Global Economic and Market News for Wednesday, June 4, 2025

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