Market Surges on China Trade Talk Hopes: Wall Street Recap for Friday, May 2, 2025

Major Indexes Rally as China Signals Openness to Trade Negotiations

U.S. stock markets surged on Friday, May 2, 2025, as investors cheered China’s announcement that it is evaluating the possibility of starting trade negotiations with the United States. This development sparked optimism that the recent trade tensions between the world’s two largest economies might ease in the near future.

The S&P 500 climbed 1.57% to close at 5,691.93, adding 87.79 points and extending its winning streak to nine consecutive sessions. The Dow Jones Industrial Average jumped 1.38% to 41,314.21, gaining 561.25 points and continuing its own eight-day winning streak. Meanwhile, the tech-heavy Nasdaq Composite advanced 1.72% to 18,016.22, adding 305.48 points as technology stocks led the market higher.

The market’s positive momentum was further reinforced by the VIX (volatility index) dropping 7.85% to 22.67, indicating decreasing market anxiety despite recent trade tensions.

China-U.S. Trade Relations Show Signs of Improvement

Friday’s market rally was primarily driven by an announcement from China’s Commerce Ministry stating that Beijing is “evaluating” the current state of affairs in the trade war with the United States. This declaration represents the first step toward potentially lowering the reciprocal tariffs that have escalated in recent weeks.

“China has noted that senior US officials have repeatedly expressed their willingness to negotiate with China on tariffs,” according to a statement released by the ministry on Friday. This development comes at a crucial time as investors have been concerned about the economic impact of President Trump’s “reciprocal” tariffs announced on April 2.

Tech Giants’ Earnings Drive Market Sentiment

The market digested earnings reports from several technology giants this week, with mixed results affecting individual stocks while the broader market maintained its upward trajectory.

Apple (AAPL) shares fell 3.72% to $205.38 after the company posted fiscal second-quarter revenue from its Services division that fell short of Wall Street’s estimates. The iPhone maker also warned it expects to add $900 million in costs in the current quarter due to tariffs and reported disappointing sales in China.

Amazon (AMZN) shares remained relatively flat, up just 0.09% to $190.38, after the e-commerce giant issued light guidance for its second-quarter operating income and highlighted “tariffs and trade policies” as factors affecting its outlook.

In contrast, strong performances were seen from other tech companies:

– Nvidia (NVDA) gained 2.59% to $114.50, continuing its strong performance as the AI boom persists.
– Tesla (TSLA) surged 4.74% to $293.82.
– Palantir Technologies (PLTR) jumped 6.33% to $123.55.

Earlier in the week, Meta Platforms (META) and Microsoft (MSFT) delivered impressive earnings results that helped revive the artificial intelligence trade. Meta reported first-quarter earnings of $6.43 per share, beating estimates by 23.18%, while Microsoft posted third-quarter fiscal 2025 earnings of $3.46 per share, exceeding expectations by 8.13%.

Energy Sector in Focus with Major Earnings Reports

The energy sector was in the spotlight on Friday with several major oil companies reporting their quarterly results:

Exxon Mobil (XOM) and Chevron (CVX) released their earnings for the quarter ending March 31, 2025. Analysts had expected Exxon to report earnings per share of $1.74, representing a 15.53% decrease compared to the same quarter last year, while Chevron was projected to post earnings of $2.15 per share, a 26.62% year-over-year decrease.

Shell (SHEL) shares rose 3.71% to 2,527.00 as the global energy market continues to navigate volatile conditions amid geopolitical tensions and trade concerns.

Upcoming Market Events to Watch

Investors are closely monitoring several key economic events that could impact market direction in the coming days:

1. The Federal Reserve’s May meeting is scheduled for May 6-7, with the central bank not expected to cut interest rates at this time. However, market participants will be parsing the FOMC statement and Fed Chair Jerome Powell’s press conference for clues about how President Trump’s aggressive tariff policy could impact future monetary policy decisions.

2. The April jobs report released today showed signs of a cooling labor market. Economists had anticipated payrolls growing by 133,000 last month, down sharply from the 228,000 added in March, with the unemployment rate expected to hold steady at 4.2%.

3. Recent jobless claims data has raised concerns about labor market health, with initial claims increasing by 18,000 to 241,000 during the week ending April 26, well above consensus estimates of 223,000.

4. The ISM Non-Manufacturing report is scheduled for release on Monday, May 5, which will provide insights into the services sector’s performance.

5. The Consumer Price Index data will be released on Tuesday, May 13, offering the latest inflation readings that could influence Fed policy.

Market Outlook

As Wall Street concludes another positive week, market sentiment appears to be improving despite ongoing concerns about tariffs and their potential economic impact. The major indexes are on pace for their second consecutive winning week, with the S&P 500 up 1.4%, the Dow gaining 1.6%, and the Nasdaq advancing 1.9% for the week.

Analysts are watching closely to see if the potential thawing in U.S.-China trade relations will translate into concrete policy changes that could reduce economic uncertainty. Meanwhile, the upcoming Federal Reserve meeting and additional economic data releases will provide further clarity on the health of the U.S. economy and the potential direction of monetary policy in the face of trade tensions.

For investors focused on the “stock market recap” and wondering “why was the market up today,” the answer lies in the combination of positive signals on U.S.-China trade negotiations, continued strength in technology earnings (despite some disappointments), and optimism that economic headwinds might be less severe than previously feared.