Market Surges on US-UK Trade Deal: Stock Market Update for May 8, 2025

Based on the information gathered, I’ll now write the article about today’s stock market.

Major Indexes Rally as Trade Tensions Ease

The US stock market is experiencing a significant rally today, Thursday, May 8, 2025, as investors react positively to news of a major trade agreement between the United States and the United Kingdom. As of mid-morning trading, the Dow Jones Industrial Average is up approximately 300 points (0.9%), while the S&P 500 has climbed 1.1% and the tech-heavy Nasdaq Composite is leading gains with a robust 1.4% increase.

This upward momentum builds on yesterday’s gains when the S&P 500 closed up 0.4%, the Nasdaq Composite rose 0.3%, and the Dow Jones Industrial Average finished 0.7% higher. Today’s rally has pushed all three major indexes further into positive territory, with technology stocks leading the charge.

US-UK Trade Deal Boosts Market Sentiment

The primary catalyst for today’s market surge is President Donald Trump’s announcement of a “major trade deal” with the United Kingdom. In a Truth Social post late Wednesday, Trump teased the announcement, writing: “Big news conference tomorrow morning at 10:00am, the Oval Office, concerning a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY. THE FIRST OF MANY!!!”

This morning, Trump confirmed that “the agreement with the United Kingdom is a full and comprehensive one that will cement the relationship between the United States and the United Kingdom for many years to come.” The formal announcement is scheduled for 10:00 AM ET at the White House.

Market analysts view this development as a potential turning point in the recent trade tensions that have created volatility in global markets since Trump’s “Liberation Day” tariffs were announced in early April. Investors are hopeful that this deal could be the first of several, potentially easing concerns about a broader global trade war.

Tech Stocks Lead the Rally

Technology stocks are outperforming the broader market today, with several major companies posting significant gains. Nvidia (NVDA) shares are up nearly 2% following reports that the Trump administration plans to rescind and replace AI chip export restrictions implemented during the Biden era. The Commerce Department has described the previous rules as “overly complex” and “overly bureaucratic.”

Other tech giants are also performing well in morning trading, with Apple (AAPL), Meta Platforms (META), Tesla (TSLA), and Amazon (AMZN) all advancing more than 1%. Advanced Micro Devices (AMD) has gained approximately 2%, benefiting from both the positive trade news and strong earnings reported earlier this week.

Federal Reserve’s “Wait and See” Approach

Yesterday’s Federal Reserve decision to maintain interest rates at their current level of 4.25% to 4.5% continues to influence market sentiment. Fed Chair Jerome Powell emphasized that the central bank is not in a “hurry” to cut interest rates and would “wait and see” the economic impacts of recent tariffs.

Powell noted increased uncertainty in the economic outlook, stating, “My gut tells me that uncertainty about the path of the economy is extremely elevated and that the downside risks have increased.” He added, “There are cases in which it would be appropriate for us to cut rates this year, there are cases in which it wouldn’t. We just don’t know.”

The Fed’s cautious stance appears to be reassuring investors that monetary policy will remain responsive to economic conditions, even as trade developments create new variables.

Earnings Season Continues

Several major companies are reporting earnings today, adding to market dynamics. Warner Bros. Discovery (WBD) and Peloton (PTON) are among the notable firms releasing results before the opening bell. Additionally, Shopify (SHOP), ConocoPhillips (COP), and Canadian Natural Resources (CNQ) are expected to report quarterly earnings today.

Yesterday’s after-hours trading saw mixed results from reporting companies. AppLovin shares rallied 13% on stronger-than-expected quarterly results, while Arm Holdings fell 9% after providing guidance that disappointed investors.

Economic Data and Upcoming Events

Investors are awaiting today’s release of weekly jobless claims and the inflation expectations survey from the Federal Reserve Bank of New York, which will provide fresh insights into labor market conditions and consumer sentiment.

Looking ahead, market participants will be closely monitoring developments in US-China trade relations. Top US and Chinese officials are scheduled to meet this weekend in Geneva for the first major trade talks since President Trump increased tariffs on Chinese imports to 145% in April. While expectations for a comprehensive agreement remain tempered, any signs of progress could further boost market sentiment.

Market Outlook

Despite today’s rally, some analysts remain cautious about overall market positioning. According to Chris Montagu, Citi’s global head of quantitative research, “De-escalating trade tensions and a better-than-expected earnings season have led to a period of stability for investor positioning. However, the uplift from bullish flows has been considerably restrained.”

Utility stocks have been outperforming the broader market year-to-date, with the S&P 500 Utilities Select ETF (XLU) up more than 6% compared to a 4% drop for the S&P 500. This sector’s strength comes amid surging power demand, particularly from data centers supporting AI growth and increased manufacturing activity.

As the trading day progresses, investors will be watching the 10:00 AM trade deal announcement closely for details that could further influence market direction. With reduced trade tensions, solid corporate earnings, and a measured approach from the Federal Reserve, market sentiment appears to be improving after weeks of uncertainty.