U.S. Stocks Plummet Amid Trump's Fresh China Trade Threats

Despite a glimmer of hope from positive inflation data, U.S. stocks took a nosedive on May 30 as President Donald Trump unleashed another round of fiery threats against China's trade policies. The tension? Palpable. The market? Shaken.

The Dow Jones crashed by a whopping 240 points, a 0.57% drop, while the S&P 500 wasn't far behind, sinking 60 points, or 1.00%. But the real drama unfolded at the tech-heavy Nasdaq, which hemorrhaged 307 points, a gut-wrenching 1.60% loss.

All eyes were glued to Trump's latest Twitter storm where he accused China of completely trashing their trade deal with the U.S. Remember those paused 145% tariffs on Chinese imports? Well, Trump wasn't mincing words: "The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!" Yet, he left us hanging without specifics on what China supposedly did wrong.

Ever since April 2, when Trump dropped the tariff bombshell on major U.S. trading partners, markets have been on edge. And even though a federal court tossed out those tariffs on May 29, the uncertainty keeps dragging the stock market down.

Tariffs Rattle the Fed, Despite Slow Inflation

These tariffs aren't just shaking the stock market; they're also messing with the Federal Reserve's plans. A Morgan Stanley analyst spilled the beans, saying tariffs will definitely jack up inflation in the U.S., and the Fed is watching closely. That's why, despite the feel-good inflation numbers, rates are likely staying put.

April saw core inflation jump to 2.5%, the best since 2021, and the Fed's favorite metric for setting monetary policy. But even though we haven't felt the inflationary pinch from tariffs just yet, everyone agrees it's coming.

Since the tariffs kicked in during April, the Fed's been playing it cool, sticking to their wait-and-see game. And Chair Jerome Powell? He's not budging to the White House's nudges to slash interest rates. The Fed's playing it smart, watching the storm unfold.