Market Recap: Stocks Edge Higher as Investors Eye US-China Trade Talks – May 9, 2025

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Major Indexes Continue Upward Momentum on Trade Deal Hopes

The U.S. stock market edged higher on Friday, May 9, 2025, as investors remained cautiously optimistic following President Trump’s recent trade agreement with the United Kingdom and ahead of crucial US-China trade talks. The major indexes are on track to close the week with modest gains after experiencing volatility earlier in the month due to trade concerns.

As of the latest trading session, the S&P 500 rose 0.4% to approximately 5,610, while the tech-heavy Nasdaq Composite climbed 0.7%. The Dow Jones Industrial Average added about 127 points, or 0.3%, hovering around 41,110. This marks a potential third consecutive day of gains for the major indexes, which have been recovering from earlier losses triggered by tariff concerns.

Market sentiment has improved following President Trump’s announcement of a trade framework with the UK on Thursday, which represents his first trade deal since imposing sweeping tariffs on US trade partners last month. Under the agreement, imports from the UK will continue to face a 10% tariff, but UK autos will receive some relief, and Britain’s aerospace industry will offer “preferential access” to U.S. manufacturers.

Trade Tensions and Upcoming US-China Talks Drive Market Sentiment

The market’s primary focus remains on the high-level meeting between U.S. and Chinese officials scheduled for Saturday in Switzerland. This will be the first formal talks since Trump launched an escalating trade war between the world’s two largest economies. Investors are closely monitoring developments, as any progress could significantly impact market direction next week.

In a social media post on Friday, President Trump floated the possibility of reducing tariffs on Chinese imports from the current 145% to 80%, though he indicated the final decision would rest with Treasury Secretary Scott Bessent, who will be attending the Switzerland meeting. While this would represent a reduction, the proposed tariff level remains substantial, creating uncertainty in the markets.

“Many Trade Deals in the hopper, all good (GREAT!) ones!” Trump posted on his Truth Social network, fueling optimism that more trade agreements could be forthcoming.

Recent Economic Data and Corporate Earnings

Recent economic indicators have shown mixed signals for the U.S. economy. China reported April exports rose 8.1% year-over-year, significantly outpacing analysts’ expectations of a 1.9% gain. However, exports to the U.S. plunged 21% as Trump’s steep tariff increases took effect. This data underscores the potential economic impact of prolonged trade tensions.

In the corporate earnings landscape, several companies reported results that moved their stocks significantly:

– Lyft (LYFT) rallied 17.6% after delivering stronger-than-expected quarterly profits, though revenue fell short of analysts’ forecasts.

– Taiwan Semiconductor Manufacturing (TSM), the chip giant known as TSMC, rose 2.5% after reporting that its April revenue jumped 48.1% from a year earlier.

– Expedia (EXPE) dropped 10% after trimming its full-year bookings forecast, highlighting a 7% decline in travel demand to the U.S., including a 30% drop in bookings from Canada.

Upcoming Market Events to Watch

Looking ahead, investors should monitor several key economic events that could impact market performance:

1. The outcome of the US-China trade talks this weekend will likely set the tone for market activity early next week.

2. The economic calendar for the coming week includes consumer credit data for March, which will be released on Wednesday, May 7.

3. Thursday, May 8, will see the release of initial jobless claims, U.S. productivity data for Q1, and wholesale inventories for March.

4. The Federal Reserve’s next policy meeting is scheduled to begin on Tuesday, with a press conference by Fed Chair Powell on Wednesday that could provide insights into future interest rate decisions.

Market Outlook and Analyst Perspectives

Market analysts remain cautiously optimistic but acknowledge that trade tensions continue to be a significant source of uncertainty. The S&P 500 is on track for what may be its first week in seven where the index moves by less than 1.5%, following a period of heightened volatility driven by trade concerns.

In the bond market, the yield on the 10-year Treasury held steady at 4.37%, where it closed on Thursday. Meanwhile, gold has seen modest gains in a volatile week, after experiencing both a 6% gain and fall in earlier sessions as market sentiment fluctuated with trade developments.

As we move forward, market participants will be closely watching for any signs of progress in trade negotiations, as well as upcoming economic data releases that could provide insights into the health of the U.S. economy amid ongoing global trade uncertainties.