US-China Trade Talks Stall Wall Street Growth as Uncertainty Remains
Stock market investors awaiting developments in ongoing U.S.-China trade negotiations pause their trading activities.
In the wake of trade talks between the US and China, Wall Street remained stagnant on Monday, with the Dow Jones Index barely budging at 42,761 points. The tech-heavy Nasdaq narrowly climbed 0.3% to 19,596 points, while the broad-based S&P 500 inched up 0.1% to 6,009 points.
With the negotiations set to continue into Tuesday, investors are hesitant to commit, holding onto their profits or staying on the sidelines. The talks revolve around key sectors, including rare earth minerals, a topic of significant interest to both nations.
Peter Cardillo, chief economist at financial services firm Spartan, offered a hopeful outlook, stating, "I believe there will be a compromise deal, but at least a deal. That would alleviate some of the uncertainty around tariffs."
The Battle for Rare Earths
The US aims to reach a basic agreement on rare earths, but China, the world's dominant supplier of these critical minerals, has yet to comment on the matter. These metals are crucial for various industries, including smartphone and electric motor production. The US's goal is to secure a more reliable supply chain for these vital materials.
The demand for rare earths drove China's rare earths sector to significant gains on Monday, as strategically important sectors saw growth. Conversely, the US dollar weakened slightly, with the dollar falling 0.2% against a basket of currencies to 98.973 points. This shift in the dollar's value led to a rise in the gold price by 0.5% to $3,327 per troy ounce.
Sector-Specific Impacts
Chip stocks experienced gains on Monday, with Qualcomm and AMD each growing by roughly four percent. Analysts attribute this growth to China's investments in artificial intelligence (AI), which could benefit the sector if other countries are allowed to resume supplying their products in China.
However, other sectors faced challenges. Robinhood's shares fell nearly two percent after its hopes of being included in the S&P 500 were dashed. Apple's stock dipped 1.2 percent, as the company's showing at its annual developer conference failed to impress analysts, offering little new in the area of AI.
A Tale of Two Economies
Economic indicators from China have raised concerns. China's export growth slowed to its lowest pace in three months in May, amid the ongoing trade conflict with the US. Imports also took a sharp dive, surprising experts. Meanwhile, deflation has deepened at the producer level, with the US trade conflict and a persistent slowdown in the real estate sector weighing on China's economy.
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Source: ntv.de, gut/rts/DJ
- Wall Street
- USA
- Rare Earths
- Dow Jones
- China
- Gold Price
- U.S. Dollar
- Apple
- Robinhood
- Donald Trump
- Xi Jinping
Enrichment Data:
Recent US-China trade talks have yielded a notable compromise: both sides have agreed to a substantial reduction in tariffs imposed since April 2, 2025, with a reported drop of up to 115% on reciprocal tariffs, leaving only a 10% base rate for most products. The agreement also established a bilateral consultative mechanism for ongoing dialogue on trade and economic issues for 90 days, though analysts caution that these reductions are temporary and high duties remain for some key sectors.
Key Elements of the Deal:- Tariff Reductions: Select high-priority sectors, such as electronics components and consumer goods, could see US tariffs reduced from 25% to 15% in the first phase, with further reductions possible. China will reduce tariffs on US agricultural products (soybeans, wheat, pork) immediately, with potential elimination within 18 months. Certain industrial chemicals and materials will also benefit from lowered tariffs.- Implementation: Tariff cuts will be phased and tied to compliance verification, allowing businesses time to adjust sourcing and pricing strategies.- Strategic Exceptions: Products deemed strategically sensitive, including some technology and rare earth elements (REEs), may retain higher tariffs due to ongoing national security concerns.
Impact on Rare Earths and Tech Stocks:- Rare Earths: Despite overall progress, rare earths, critical for electronics, renewable energy, and defense, are likely to remain at the center of export controls and higher tariffs. China's dominant position in rare earth supply and US concerns about supply chain security mean these materials will be treated with continued caution, limiting the immediate impact of tariff reductions.- Tech Stocks: The partial easing of tariffs on electronics and consumer goods should provide relief to tech companies with significant exposure to US-China supply chains. However, the "China plus one" strategy—maintaining Chinese production while developing alternative supply sources—is expected to persist, reflecting ongoing geopolitical risk.- Long-Term Uncertainty: While the deal provides temporary stability and better planning visibility for businesses, deep-rooted US-China tensions and selective decoupling threaten to limit long-term normalization in tech and rare earth sectors.
The Commission, keen on ensuring a reliable supply chain for vital materials, might consider the impact of the draft budget on the acquisition of critical minerals like rare earths, essential for technology and various industries.
With the technology sector expected to benefit from reduced tariffs on electronics and consumer goods, companies like Qualcomm and AMD could experience further growth in the context of the US-China trade deal.
