In the grand theater of global finance, the final act of a tumultuous month played out on Wall Street with a sense of anticlimax, as the specter of tariffs once again cast its shadow over the markets. US stocks, having navigated a month marked by wild swings and dramatic turns, closed out with a whimper on Friday. The day’s trading session was a study in volatility, with shares bouncing around like leaves in a storm as investors grappled with the latest twist in the ongoing trade saga.

The Dow Jones Industrial Average, a barometer of the nation’s economic health, managed to close higher by a modest 54 points, or 0.13%, after a day of seesawing. The broader S&P 500, a benchmark that captures the pulse of the market, edged lower by a mere 0.01%, while the tech-heavy Nasdaq Composite, home to the titans of innovation, fell by 0.32%. These figures, though seemingly small, belie the underlying anxiety that permeated the trading floor.

The day’s turmoil began early, with President Donald Trump taking to social media to declare that China has “totally violated” its trade agreement with the United States. The tweet, lacking specifics but heavy with implications, sent a jolt of uncertainty through the markets. It was as if a pebble had been dropped into a pond, sending ripples across the entire financial ecosystem. The Dow, S&P 500, and Nasdaq all took a step back, with the S&P 500 and Nasdaq dropping as much as 1.1% and 1.7%, respectively, in the afternoon.

Adding fuel to the fire was a report that the Trump administration was considering broadening tech sanctions on China. The news, like a sudden gust of wind, pushed stocks lower. Bloomberg’s revelation that the White House was mulling “licensing requirements on transactions with [Chinese] companies that are majority-owned by already-sanctioned firms” only deepened the sense of unease. Stephen Miller, the White House deputy chief of staff for policy, further stoked the flames by announcing that the administration was preparing additional trade actions against China.

Yet, as the trading day wore on, stocks managed to claw back some of their losses in the late afternoon. The S&P 500 and Nasdaq still closed in the red, but the overall reaction from the markets was relatively muted. It seemed as if Wall Street had grown accustomed to the president’s bluster, betting that any trade war threat would eventually be tempered. This phenomenon, dubbed the “TACO” trade — or “Trump Always Chickens Out” — has become a sort of market mantra, guiding investors through the choppy waters of trade uncertainty.

Despite the recent fluctuations, the month of May has been a paradox of volatility and strength. The S&P 500, the benchmark index that investors watch like a hawk, has posted gains of more than 6% this month, marking its best performance since November 2023 and its strongest May since 1990. The Nasdaq, driven by the tech giants that dominate its ranks, has also enjoyed a historic month, rising about 9.5% and posting its best performance since November 2023.

“While we expect bouts of market volatility ahead as investors continue to navigate a range of market, economic, and geopolitical risks,” said Ulrike Hoffmann-Burchardi, Chief Investment Officer of global equities at UBS Global Wealth Management, in a note on Thursday, “the underlying fundamentals remain strong.”

The president’s latest salvo against China comes at the end of a week where the trade war has once again taken center stage. Stocks had initially received a boost earlier in the week when the Court of International Trade blocked most of Trump’s tariffs on legal grounds. However, that rally quickly lost steam as traders bet that the White House would aggressively appeal and pursue another legal strategy. A federal appeals court on Thursday paused the CIT’s ruling, leaving the president’s massive tariff agenda in limbo as the courts deliberate its legality.

“The stunning, head-spinning, mind-boggling trade fiasco will not be resolved quickly,” said Greg Valiere, Chief US Policy Strategist at AGF Investments, in a note. “It probably will land in the Supreme Court — and even that may not settle the issue.”

Investors on Friday also digested fresh data that showed the Federal Reserve’s preferred inflation gauge cooled in April slightly more than economists had expected. The data also revealed a significant drop in consumer spending, adding another layer of complexity to the economic outlook. Trump’s reignition of the trade war in the past week has stirred up uncertainty in the markets, just as Wall Street had begun to turn the page on tariff concerns.

The S&P 500 has been steadily climbing out of an early April slump, instigated by the president’s back-and-forth on his “reciprocal” tariffs. “Even though the stock market has staged a decisive rebound since the April lows, there is still plenty of uncertainty on tariffs, especially given the legal battle that is brewing over the ‘Liberation Day’ tariffs,” said Clark Bellin, President and Chief Investment Officer at Bellwether Wealth.

The benchmark S&P 500 is up about 0.5% this year, a modest gain that belies the underlying turmoil. The dollar, meanwhile, gained slightly on Friday, but the US Dollar Index, which measures the dollar’s strength against six major foreign currencies, was set to end the month slightly in the red. It would be the dollar index’s fifth month of decline in a row and its longest monthly losing streak since 2020. The dollar has broadly weakened this year, raising concerns on Wall Street that American assets are losing their appeal.

Jonas Goltermann, Deputy Chief Markets Economist at Capital Economics, said in a Friday note that sentiment around the dollar “remains negative,” and it looks “vulnerable to further bad news on the fiscal and trade policy fronts.”

As the month draws to a close, the markets find themselves at a crossroads. The path ahead is fraught with uncertainty, as investors navigate the complex interplay of trade tensions, economic data, and geopolitical risks. The trade war, like a ghost from the past, continues to haunt the markets, reminding investors that the road to stability is rarely a straight one.

In this theater of finance, the final curtain has yet to fall. The actors — investors, policymakers, and market forces — continue to play their parts, each move and countermove shaping the narrative of the global economy. As Wall Street braces for the next act, one thing is clear: the journey will be as unpredictable as it is compelling.