U.S. Stock Market Summary for Tuesday, May 6, 2025

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Major Indices

• S&P 500: -0.77% to 5,606.91
• Dow Jones Industrial Average: -0.95% to 40,829.00
• Nasdaq 100: -0.88% to 19,791.35
• Russell 2000: -1.05% to 1,983.19

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Market Overview
U.S. equities closed broadly lower on Tuesday as investors continued to digest conflicting signals on global trade policy and awaited key interest rate decisions from the Federal Reserve. All major indices posted notable losses, with the Russell 2000 leading declines. Early-session risk aversion dominated amid heightened geopolitical uncertainty and mixed messages from the White House regarding trade agreements.

Intraday, markets attempted a partial recovery following reports that Treasury Secretary Scott Bessent and U.S. Trade Representative Jamison Greer are scheduled to resume trade negotiations with China later this week in Switzerland. However, this was not enough to reverse earlier losses driven by investor unease over President Trump’s renewed hardline stance on tariffs and trade terms.

President Trump’s comments during a meeting with the Canadian Prime Minister—stating that “a deal isn’t necessary”—contradicted earlier claims of an imminent trade agreement and triggered sharp market swings. Treasuries rallied as investors sought safety, and the 10-year yield fell 4 basis points to 4.31%.

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Sector Highlights

• Automotive: Tesla fell 1.8% after April sales data in the UK and Germany showed a two-year low, underscoring weakening demand in key international markets.
• Pharmaceuticals: Shares of Eli Lilly and Merck declined following Trump’s comments hinting at potential new import tariffs on pharmaceuticals.
• Biotech: Vaccine-related stocks declined sharply after FDA appointed Vinay Prasad—a critic of COVID-19 vaccine mandates—as head of the Center for Biologics Evaluation and Research (CBER).

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Economic Snapshot

• Trade Deficit: The U.S. trade deficit widened by 14% to $140.5 billion in March, up from $123.2 billion in February, driven by a 4.4% rise in imports against flat export growth.
• Economic Optimism Index: The RealClearMarkets/TIPP index fell to 47.9 in May from 49.1 in April, the lowest reading in seven months and below the neutral 50-mark, signaling growing public concern over economic conditions.

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Expert Commentary
Kevin Brooks of 22V Research noted, “Investors remain on the sidelines ahead of the FOMC meeting and any concrete trade deal news.”
Paul Tudor Jones told CNBC he expects Trump to eventually cut tariffs on China by 50%, but warned that even such a move may not prevent the market from hitting new lows, citing weak monetary support from the Fed and policy unpredictability as key headwinds.

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Government & Political Notes
Trade policy remained in focus, with President Trump facing criticism over his unpredictable tariff announcements. Lawmakers from both parties are reportedly exploring measures to rein in executive authority over trade decisions. Meanwhile, reports of Indian airstrikes on Pakistani territory added to geopolitical tensions late in the session.

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Conclusion
Tuesday’s market downturn reflected ongoing uncertainty surrounding U.S. trade policy, a cautious Fed, and mixed economic signals. Investors are treading carefully ahead of key policy decisions and international negotiations. With volatility likely to persist, upcoming trade talks and macroeconomic releases will be pivotal in shaping market direction.

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