On May 30, 2025, Wall Street investors exhibited increased caution following the reinstatement of tariffs and proposed tax changes affecting foreign investments. A federal appeals court’s decision to temporarily reinstate President Donald Trump’s tariffs has introduced uncertainty into the market, impacting investor sentiment.
The reinstated tariffs, which had previously been blocked by a trade court, have raised concerns about the potential for a capital war, especially in light of proposed tax legislation that could impose up to a 20% tax on foreign investors’ passive income. These developments have led to a second consecutive week of outflows from U.S. equity funds, with investors pulling a net $5.46 billion during the week ending May 28.
Despite these challenges, the S&P 500 and Nasdaq are poised for their best month since November 2023, and the Dow is set for a 4% monthly gain. However, the market remains sensitive to policy changes and economic indicators. Investors are closely watching the upcoming U.S. Personal Consumption Expenditure (PCE) data, the Federal Reserve’s preferred inflation measure, which could influence future interest rate decisions.
In summary, while Wall Street has shown resilience, the reinstatement of tariffs and proposed tax changes have introduced new uncertainties. Investor sentiment is cautious, with fund flows reflecting concerns about the evolving policy landscape. The coming weeks will be critical in determining the market’s direction as investors assess the impact of these developments.
