U.S. stock indices were mixed in early Monday trade as renewed tensions between China and the U.S. raised the possibility of a costly trade war between the two largest economies in the world.
At 09:32 ET (13:32 GMT), Dow Jones Industrial Average fell 170 points, or 0.4%, S&P 500 dropped 11 points, or 0.2%, while Nasdaq 100 rose 25 points, or 0.1%.
Wall Street is starting the new week, and month, on a weak note, handing back some of the prior month’s strong gains following a war of words between the U.S. and China.
On Friday, the broad-based S&P 500 ended May with a more than 6% gain, its best monthly performance since November 2023. The tech-heavy Nasdaq Composite surged more than 9% and the blue chip Dow Jones Industrial Average gained about 4%. 
China pushes back against Trump’s accusations 
China pushed back earlier Monday against U.S. accusations that it had violated the Geneva trade agreement, as a war of words between the two economic powerhouses erupted, suggesting that trade negotiations were struggling.
China said on Monday that U.S. President Donald Trump’s accusations that Beijing had violated the consensus reached in Geneva trade talks were "groundless", and promised to take forceful measures to safeguard its interests.
The comment by the commerce ministry was in response to Trump’s remarks on Friday that China had breached a bilateral deal to roll back tariffs.
This followed U.S. Treasury Secretary Scott Bessent stating late last week that trade talks with Beijing had stalled.
Beijing and Washington agreed in mid-May in Geneva to pause triple-digit tariffs for 90 days. In addition, China also promised to lift trade countermeasures that restricted its exports of the critical metals needed for U.S. semiconductor, electronics and defence production.
Trump on Friday also said he will hike his tariffs on steel imports to 50% from 25%, effective from June 4. 
Separately, Commerce Secretary Howard Lutnick said over the weekend that Trump’s tariffs were here to stay, especially in the face of a legal challenge.
A federal trade court had last week ruled to block a bulk of Trump’s tariff agenda, although they were swiftly reinstated by an appeals court. The case is expected to reach the Supreme Court, although Trump warned that he will proceed with his tariffs using other mechanisms.
PMIs, Powell speech awaited for more cues 
Several cues on the U.S. economy are due on Monday, starting with PMI data from S&P and the ISM.
A slew of Fed officials are also set to speak, most notably Chair Jerome Powell at a conference in Washington DC. Focus will be largely on any more comments on the U.S. economy, especially following PCE price index data from last week that showed the Fed’s preferred inflation gauge cooling slightly.
Worries over the economic outlook could hinder the main stock indices this week, and thus investors will be focusing on a slew of reports due this week that could provide insight into how tariffs have affected the U.S. economy, in particular the May nonfarm payrolls reading on Friday.
This report is expected to show the economy created 130,000 new jobs, down from a higher-than-expected 177,000 in April.
The Federal Reserve will still be able to cut interest rates this year, with recent data supporting this outlook, Fed Governor Christopher Waller said on Monday.
Speaking at a conference in South Korea, Waller said that a rise in inflation from President Donald Trump’s trade tariffs was unlikely to be persistent, giving the Fed more confidence to lower rates later this year. 
If “underlying inflation continues to make progress to our 2% goal,” along with tariffs settling at lower rates and employment remaining “solid,” “I would be supporting good news rate cuts later this year,” Waller said.
Chip stocks fall, aluminum companies rise 
In the corporate sector, chip stocks--like Nvidia (NASDAQ:NVDA), Marvell (NASDAQ:MRVL) and Taiwan Semiconductor Manufacturing (NYSE:TSM)--slid lower on reports that the Trump administration is preparing to tighten restrictions on China’s tech sector by expanding existing rules to include subsidiaries of sanctioned firms.
According to a Friday report by Bloomberg, a proposed regulation would require U.S. government licenses for transactions involving any company that is majority-owned by an entity already subject to U.S. curbs.
The move targets attempts to bypass current restrictions through the creation of new subsidiaries, a tactic U.S. officials say has become a persistent loophole.
On the flip side, U.S. aluminum and steel shares surged in premarket Monday trade on Trump’s tariffs news, boosting the likes of Cleveland-Cliffs (NYSE:CLF), Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD).
Crude soars after OPEC+ meeting 
Oil prices rose strongly Monday after OPEC+ announced plans to increase production in July by the same amount as the prior two months, something of a relief after talk of a bigger increase. 
At 05:05 ET, Brent futures climbed 3.1% to $64.69 a barrel, and U.S. West Texas Intermediate crude futures rose 3.4% to $62.86 a barrel.
Both benchmarks have jumped higher Monday, after dropping more than 1% last week, after the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, decided on Saturday to raise output by 411,000 barrels per day in July.
This is the third consecutive month the group of top producers has increased output by the same amount, and followed reports that they were set to discuss a bigger production hike as it looks to wrestle back market share.