Tariffs Up, Rates Down, Markets Rally: What a Week!

Daniel Ledenev
Jun 8
6 min read

Updated: Jun 28

👋 Welcome Back Investors! (June 2 to 6, 2025)

We’re back with another clean breakdown of what actually moved the markets this week. Whether you’re a long-time reader or just dropping in, this space keeps it sharp, focused, and easy to follow. The first week of June delivered a mix of fresh volatility and surprising strength. AI stocks stayed hot, steel tariffs returned to the spotlight, and bond markets got rattled by a major court ruling. Toss in a Fed that’s starting to blink and job numbers that refused to slow down, and you've got a market juggling momentum with macro risk. Let’s break it all down!

🔁 Stocks Rebound as Markets Shrug Off U.S.–China Trade Tensions

Despite fresh friction between the U.S. and China, stocks managed to bounce back this week. As reported by Nasdaq, the market showed surprising resilience even as trade rhetoric ramped up, with Washington hinting at new tariffs and Beijing signaling retaliation. Investors, however, seemed more focused on economic strength and cooling inflation.

The S&P 500 and Nasdaq both gained, boosted by strong performances in tech and industrials. Analysts credited the rebound to robust U.S. consumer data and ongoing AI-driven optimism, which helped offset concerns about trade war fallout. While headlines continued to swirl; particularly around tariffs, export controls, and restrictions on Chinese tech access, the broader market response was muted. This week’s action reflects a familiar pattern: the market is becoming increasingly desensitized to geopolitical noise, especially when earnings and macro data are holding up. That said, traders remain on alert. A real escalation could still disrupt supply chains and chip away at corporate margins. For now? Bulls are still in control; trade war or not.

📈 Dow Pops 400+ Points as AI Stocks Lead and Dollar Slips

The Dow Jones Industrial Average surged 410 points on Tuesday, June 3, as investor momentum returned on the back of strong earnings, renewed AI enthusiasm, and a pullback in the U.S. dollar. The rally was broad-based, with notable gains in tech, consumer goods, and industrials. Driving the day’s rally was renewed optimism around AI leaders like Nvidia and Microsoft, which helped push the Nasdaq and S&P 500 higher as well. Investors also welcomed a weaker U.S. dollar, which tends to boost multinational earnings and support commodity prices like oil and gold, both of which ticked up. On the economic front, better-than-expected factory orders and steady job data helped ease recession fears. Despite ongoing trade headlines and political noise, markets appeared focused on fundamentals, and for now, those are still flashing green.

In short: the AI trade still has legs, and with the dollar backing off, the bulls had room to run.

🏗️ Trump Hikes Steel Tariffs Again, Promising Jobs and “100% American Steel”

Former President Donald Trump made headlines again this week by doubling tariffs on steel and aluminum imports, a move he framed as a renewed commitment to American manufacturing. As reported, the tariffs, set at 50% for steel and 25% for aluminum are being positioned as a centerpiece of Trump’s economic agenda heading into the 2026 election season. Trump’s announcement was delivered at a campaign style rally, where he pledged to use trade policy to “protect American jobs” and ensure that all U.S. infrastructure and defense projects use only domestically produced steel. He also reiterated his long standing stance against what he calls “unfair foreign competition,” specifically targeting China and other low cost exporters. Markets responded quickly: U.S. steel stocks such as Nucor and Steel Dynamics surged by double digits, as investors anticipated higher domestic demand and reduced competition. However, economists and global trade experts raised red flags, warning that retaliatory tariffs and higher costs for manufacturers could ripple through the broader economy. This latest tariff escalation adds another layer of uncertainty to already tense global trade dynamics. With steel at the center of both policy and politics, the move could have wide-reaching effects on construction, defense, and automotive sectors.

Bottom line: Trump’s tariff hammer is back—and it’s hitting hard. Whether it boosts U.S. jobs or sparks another trade war is what investors and policy watchers will be tracking next.

🏦 Fed Finally Cuts Rates, but Don’t Expect a Full Pivot Just Yet

After months of speculation, the Federal Reserve officially cut interest rates for the first time in 2025, reducing its benchmark rate by 25 basis points. But as detailed in PGIM’s latest Markets in Motion briefing, the tone from policymakers was far from dovish. While the rate cut reflects growing pressure from trade tensions, global demand softness, and a weakening dollar, the Fed made it clear that this was not the start of an aggressive easing cycle. Instead, Chair Powell emphasized that the move was a “mid-cycle adjustment,” suggesting further cuts are far from guaranteed unless economic data deteriorates further.

What’s Behind the Cut?

Inflation remains below target, despite solid employment figures.
The U.S. dollar’s recent strength has hurt exports and added deflationary pressure.
Rising geopolitical risk (especially around tariffs and global trade) has hurt business sentiment.
Slowing consumer spending and flat wage growth are adding to policy pressure.

Market Interpretation

Equities initially rallied on the announcement, but enthusiasm cooled as Powell’s press conference made it clear that the Fed remains data dependent and cautious. Bond yields fell slightly, while the dollar continued its downward slide. Market participants are now pricing in one or maybe two more cuts in 2025, but the Fed’s forward guidance is intentionally vague.

What’s Next?

PGIM analysts believe this move marks a strategic hedge against downside risks, not a panicked response. In their view:

The Fed is trying to get ahead of potential shocks, particularly from trade or global credit tightening.
A full blown easing cycle will only materialize if growth slows dramatically or the job market cracks.
Investors should expect increased volatility, especially in rate sensitive sectors like real estate, utilities, and financials.

Bottom line: The Fed is easing; but cautiously. For now, this isn’t a “whatever it takes” moment; it’s a “just in case” one. Markets may want more, but the Fed is keeping its powder dry.

💵 Dollar Weakens as Trade Tensions Pressure U.S. Outlook

The U.S. dollar hovered near a six-week low this week, as mounting trade tensions and signs of economic strain weighed on investor sentiment. A combination of ongoing tariff threats, weak manufacturing data, and a cautious Fed has pushed the greenback lower against major currencies. Traders have been reacting to a growing belief that the trade war is beginning to inflict real damage on the U.S. economy. Business confidence has slipped, supply chains remain strained, and global demand appears to be cooling. Meanwhile, bond yields are drifting lower, reinforcing expectations that the Fed may continue to ease monetary policy later this year.

What’s Driving the Dollar Down?

Escalating tariff rhetoric, particularly between the U.S. and both China and the EU, is fueling uncertainty.
A recent Federal Reserve rate cut, combined with a “less easing than expected” message, left investors unsure about the path forward.
Key U.S. data points, especially manufacturing PMI and consumer sentiment have softened, suggesting the broader economy is slowing.

Currency Moves

The euro and British pound strengthened modestly as traders rotated out of the dollar.
Emerging market currencies saw mixed reactions, with some gaining from dollar weakness and others pressured by risk-off sentiment.

Currency strategists are warning that unless U.S. trade and fiscal policy stabilizes, the dollar could face further downside pressure in the coming weeks. That, in turn, would ripple into commodities, tech stocks, and multinationals, many of which benefit from a weaker dollar environment.

Bottom line: The dollar is losing altitude and the cause isn’t just policy, it’s perception. Global investors are growing nervous about U.S. leadership on trade, and the currency is starting to reflect that.

👀 Stocks to Watch: What This Week’s Moves Reveal

The first full week of June brought heat across the board; AI powerhouses kept surging, tariffs came roaring back, and rate chatter added fuel to market swings. From tech breakouts to politically driven rallies, here are the stocks that made the biggest noise from June 2 to 6:

Nvidia (NVDA) – Continued its dominance with shares climbing over 3% midweek. After a 262% revenue jump and strong forward guidance last week, Nvidia stayed hot as investors remained focused on its Data Center growth and leadership in AI infrastructure.
Nucor (NUE) – Jumped more than 10% following Trump’s announcement of 50% tariffs on steel imports. The move reignited the steel trade, and Nucor surged as one of the top domestic beneficiaries.
C3.ai (AI) – Extended last week’s rally, building on momentum from its U.S. Air Force contract. The stock remained a favorite in the defense-tech crossover narrative.
Meta (META) – Pushed higher alongside other AI-heavy tech names as the “Magnificent 7” regained steam. Ad spending outlooks and LLM expansion efforts kept institutional attention strong.
Gold Miners (GDX, NEM) – Gained modestly as the U.S. dollar weakened and investors hedged around trade and rate uncertainty. Rising gold prices provided tailwinds to the sector.

🛎️That’s a Wrap!

That’s it for this week’s market recap, thanks for reading! From Nvidia’s continued rally and Trump’s steel tariffs to a sliding dollar and growing rate cut speculation, early June kicked off with no shortage of market-moving headlines. Whether it was the Fed’s cautious tone, AI-driven strength, or renewed trade drama, investors had plenty to react to. We’ll be back next week with another sharp look at what moved, what mattered, and what’s next as we head deeper into June.

Until then, stay focused and stay curious. Catch you next week 👋