Market Recap: Stocks Climb as US-China Tariff Negotiations Spark Rally on May 2, 2025
Major Indexes Surge on Potential Trade War Breakthrough
The U.S. stock market rallied on Friday, May 2, 2025, as news of potential U.S.-China tariff negotiations sparked optimism among investors. The major indexes closed higher, continuing their upward momentum from the previous session.
As of market close, futures on the Dow Jones Industrial Average climbed 0.74% to 41,158.00 points, while the S&P 500 futures rose 0.60% to 5,657.00. The tech-heavy Nasdaq Composite futures gained 0.35% to 19,939.75.
The market rally came after China’s Commerce Ministry announced it was “evaluating” the current state of affairs in the trade war between China and the U.S. This declaration represents the first step toward potentially lowering the reciprocal tariffs that have disrupted global trade relations between the world’s two largest economies.
Tech Giants Report Mixed Results
Thursday’s after-hours trading saw mixed reactions to earnings reports from tech giants Apple (AAPL) and Amazon (AMZN). Apple shares fell 4% in Friday’s trading despite beating overall earnings expectations, as investors focused on disappointing services revenue and warnings about a potential $900 million hit from President Trump’s tariffs.
Amazon stock showed resilience, dipping just 0.4% despite issuing soft guidance for the current period. The e-commerce giant forecast operating income between $13 billion and $17.5 billion, falling short of analysts’ expectations of $17.64 billion. The company specifically mentioned that tariff and trade policies could affect its guidance.
Meanwhile, Nvidia (NVDA) advanced 2% following a report from The Information that the company is tailoring chips for sale in China after the U.S. export ban.
Notable Stock Movements
Several stocks made significant moves on Friday:
– Duolingo shares soared more than 18% after the language learning app guided toward better-than-expected revenue forecasts.
– Block (XYZ) tumbled 20% after reporting disappointing first-quarter revenue and issuing weak guidance due to macro uncertainty.
– Maplebear (Instacart) rallied 13% on strong second-quarter guidance despite slight misses on both top and bottom lines in the first quarter.
– Dexcom surged 15% after posting first-quarter revenue that narrowly topped expectations and announcing a $750 million share repurchase program.
– Take-Two Interactive Software fell more than 5% after announcing that the new version of Grand Theft Auto would be delayed until May 26, 2026.
Upcoming Market Events
Investors are now turning their attention to several key upcoming events that could impact market direction:
1. **April Jobs Report**: Friday’s jobs data will be closely watched as the first reading since Trump’s “Liberation Day” tariffs, with investors vigilant for signs of a cooling labor market.
2. **Earnings Season Continues**: The earnings calendar remains packed with notable companies reporting in the coming weeks, including:
– Walmart (WMT) on May 15, which analysts at D.A. Davidson call “the most important consumer earnings report of the season”
– Nvidia (NVDA) on May 28, a highly anticipated report given the company’s central role in the AI boom
– Other notable upcoming reports include Deere & Co (DE), Applied Materials (AMAT), and Take-Two Interactive Software (TTWO) in mid-May
3. **OPEC+ Meeting**: Oil markets will be watching the OPEC+ meeting scheduled for May 5, which could impact energy prices and related stocks.
Market Outlook
The market’s positive reaction to potential U.S.-China trade negotiations suggests investors are hopeful for a resolution to one of the biggest economic uncertainties of 2025. However, analysts remain cautious about the impact of tariffs on corporate earnings, particularly for consumer-facing companies.
Gold prices have seen a marginal rebound from levels of $3,200 after experiencing consecutive weekly losses for the first time in 2025. The precious metal had touched $3,500 last week before starting a sharp decline as tech earnings pulled investors back into the stock market despite recent trade war-induced volatility.
As the S&P 500 marks its eighth consecutive day of gains, investors will be closely monitoring upcoming economic data and earnings reports for further direction. The market’s resilience in the face of trade tensions and mixed earnings results suggests underlying strength, but caution remains warranted given the uncertain global economic environment.
