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Investing.com - U.S. stock futures slipped slightly Friday as the rump administration’s trade tariffs were reinstated, but trade talks with China appear to have hit an impasse. Investors await the release of the Fed’s favorite inflation gauge, while the oil cartel OPEC+ meets over the weekend to discuss future output levels.
1. Trump tariffs back in place
Another day, another tariff surprise.
The U.S. Court of International Trade ruled on Wednesday that U.S. President Donald Trump had overstepped his authority with his tariff agenda, and had given the president 10 days to reverse course.
Trump appealed the decision almost immediately, and the appeals court responded late Thursday, leaving his tariff agenda in place as it considers his appeal.
That is by no means a foreshadowing of its eventual ruling, and the next hearing on the case is scheduled for June 5, but it just adds to the general uncertainty, further pushing out decisions on hiring, spending or cutting rates.
Trump railed against the trade court ruling, while lauding the court of appeals for staying the initial ruling, and his team has already indicated that they are looking at other means of keeping the tariffs in effect.
Trump outlined steep tariffs against major U.S. trading partners in April, with particular focus on countries with large trade surpluses with the United States, before announcing a 90-day extension on most of these tariffs shortly after.
His strategy was to use these steep tariffs to wring concessions from trading partners while negotiating trade deals.
2. U.S.-China trade talks stall
The U.S. and China, the two largest economies in the world, came to an agreement a couple of weeks ago to rein in hefty tariffs for 90 days, to provide room for trade negotiations.
However, a more permanent accord is proving harder to come by, with U.S. Treasury Secretary Scott Bessent stating late Thursday that trade talks with Beijing had stalled, and a personal intervention from President Trump may be needed.
"I believe we may at some point have a call between the president and party Chair Xi," Bessent said.
"Given the magnitude of the talks, given the complexity ... this is going to require both leaders to weigh in with each other," he said. "They have a good relationship, and I am confident that the Chinese will come to the table when President Trump makes his preferences known."
The U.S.-China agreement prompted a massive relief rally in global stocks, but it did nothing to address the underlying reasons for Trump’s tariffs on Chinese goods, mainly longstanding U.S. complaints about China’s state-dominated, export-driven economic model.
3. U.S. futures slip at end of positive month
U.S. stock futures slipped lower Friday following the latest trade uncertainty, ahead of the release of a key inflation reading.
At 03:35 ET (07:35 GMT), the S&P 500 futures traded 50 points, or 0.1%, lower Nasdaq 100 futures dropped 11 points, or 0.2%, and Dow futures fell 50 points, or 0.2%.
The decision of the appeal court to allow President Trump’s tariffs to remain in place until next week is the latest dose of uncertainty for investors to contend with as the month comes to an end.
Yet Wall Street is set to post strong gains in May, with the broad-based S&P 500 adding more than 6% this month, the tech-heavy Nasdaq Composite surging 10% in that time, and the blue chip Dow Jones Industrial Average gaining around 4%.
The data slate centers around the April PCE inflation release [see below], while the likes of clothing retailer Gap (NYSE:GAP), cosmetics company Ulta Beauty (NASDAQ:ULTA) and tech giant Dell Technologies (NYSE:DELL) will be in focus after they released results after the close on Thursday.
4. PCE data looms large
Away from trade turmoil, investors will also be studying the release of the latest PCE price index data - the Federal Reserve’s preferred inflation gauge - for more insight into inflation in the U.S. economy, and the U.S. central bank’s likely monetary policy response.
The core PCE price index for April, a measure which excludes volatile food and energy prices, is expected to rise 0.1% on a monthly basis, up from the previous flat figure.
This would result in an annual rise of 2.5%, a touch below the 2.6% gain seen the prior month.
However, there could be some volatility attached to this release given the uncertainty surrounding the Trump administration’s trade policies, and how importers reacted to the on-off imposition of tariffs.
The Fed earlier this month kept short-term borrowing costs in the 4.25%-4.5% range where they’ve been since December, with policymakers choosing stability as they evaluate the economic impact of the Trump administration’s policies.
5. Crude awaits OPEC+ meeting
Oil prices drifted higher Friday, but were on course for a weekly loss as traders await confirmation of another OPEC+ output hike amid heightened uncertainty over President Trump’s trade tariffs.
At 03:35 ET, Brent futures climbed 0.2% to $63.50 a barrel, and U.S. West Texas Intermediate crude futures rose 0.3% to $61.15 a barrel.
Both benchmarks are on track for losses of around 1.5% this week, potentially a second consecutive losing week as uncertainty over Trump’s tariffs and their economic impact weighed on the outlook for demand.
Oil prices have lost more than 10% since Trump announced his "Liberation Day" tariffs on April 2.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, is set to meet on Saturday, with the members expected to authorize another bumper production increase for July after agreeing 411,000 barrels-per-day hikes at the previous two meetings.
(Reuters contributed reporting.)