Stocks initially rose before falling lower on Thursday as market participants weighed renewed talks between President Donald Trump and Chinese President Xi Jinping and what it could mean for the two largest global economies. Investors are also digesting the latest labor market data ahead of the Labor Department's monthly jobs report due out Friday.
The Dow Jones Industrial Average
Trump's comments come as Musk, who was until recently worked with the Trump administration, has publicly urged lawmakers to vote against the White House's "big, beautiful" spending bill, calling it a "disgusting abomination" in a post on his social media platform X. Musk argues that Trump's spending package -- which the Congressional Budget Office estimates will add $2.4 trillion to the federal budget deficits over the next decade -- will essentially bankrupt the United States.
Earlier on Thursday, Trump said he had a "very good phone call" with Xi that lasted for one and a half hours, according to a post on his social media platform Truth Social. Chinese state media also confirmed the call, stating that the call was initiated by Trump. Trump said that the call was "focused almost entirely on TRADE" and had "resulted in a very positive conclusion for both Countries" as they agree to continue negotiations with their respective trade officials in a to-be-determined location.
The United States and China had previously agreed to temporarily lower their levies on each other for 90-days after talks in Switzerland last month, leading to explosive growth for Wall Street in May's backend as investors grew more optimistic that near-term trade deals were ahead. The broader market S&P 500 and tech-heavy Nasdaq each posted their best monthly performances since November 2023 as traders poured back into growth stocks on the positive sentiment.
However, volatility has returned to Wall Street in recent weeks as tensions renewed between Beijing and Washington. Trump has publicly accused China of not holding up its pledge to approve the exports of rare earth minerals, while China has claimed the White House had undermined the deal by issuing more restrictions on semiconductors.
Also in the spotlight, initial unemployment filings unexpectedly rose last week as the labor market continues to show signs of softening, the Labor Department reported Thursday. First-time jobless claims totaled a seasonally adjusted 247,000 for the week ended May 31, up 8,000 from the previous week and above the Dow Jones estimate for 236,000.
The U.S. trade deficit, meanwhile, fell at the fastest one-month pace in history in May, the Commerce Department reported Thursday, declining to $61.6 billion from April's $76.7 billion total. Beneath the headline, exports rose 3% to $8.3 billion for the month, while imports dropped 16.3% to $68.4 billion, as companies increased their imports ahead of Trump's "Liberation Day" tariff announcement on April 2.
Federal Reserve Governor Adriana Kugler said Thursday she expects tariffs to increase prices to an extent that would require the central bank to maintain its current target range for interest rates, a decision that is widely expected by Wall Street and echoed by other policymakers in recent remarks. The Fed's next meeting is June 17-18.
"I see greater upside risks to inflation at this juncture and potential downside risks to employment and output growth down the road, and this leads me to continue to support maintaining the [Federal Open Market Committee's] policy rate at its current setting if upside risks to inflation remain," Kugler said in a speech to the Economic Club of New York.
All eyes will be on May's jobs report scheduled to release Friday morning as concern increases over the stability of the labor market. Payrolls processing firm ADP reported Wednesday that the private sector added just 37,000 positions last month, offering a snapshot of the job market as economic outlooks from both consumers and businesses dim in recent weeks. Friday's report is expected to show a gain of 125,000 for May with the unemployment rate holding steady at 4.2%.
