On Friday, the financial market experienced a significant upswing, following President Donald Trump’s announcement regarding the imminent U.S.-China trade talks scheduled for Monday. Key figures including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer are due to convene with Chinese representatives in London, stated Trump.
In the wake of this announcement, the Dow index increased by 448 points, translating into a 1.06% rise in the afternoon trading session. More broadly, the S&P 500 grew by 1.15%, and the tech-focused Nasdaq Composite leaped by 1.4%. Subsequent to Trump’s announcement, these three major indexes remained relatively consistent, each settling below the day’s peak.
President Trump inspired further optimism by stating, ‘the meeting should proceed extremely well.’ This assertion surfaces in a challenging period of a high-stakes tariff disputes between the globe’s two leading economies. The purpose of these negotiations, according to Trump, is to rectify what he perceives as unequal exchange interactions between the U.S. and its international partners.
Additionally, the announcement followed a comprehensive 90-minute dialogue between Trump and his Chinese peer, Xi Jinping. The U.S. President communicated his increasing optimism towards overcoming the persisting trade tensions in the aftermath of this call.
Much to the market’s relief, the green figures were also bolstered by the morning’s labor report – which surpassed expectations – alleviating concerns about the U.S. economy’s resilience in the initial phase of Trump’s tariff implementations. The S&P 500 notably crossed the 6,000-point threshold, which it had not managed to achieve since February.
The Dow, S&P 500, and Nasdaq were all showing signs of recording gains for a second consecutive week. Earlier on the same day, statistics from the Labor Department indicated the addition of 139,000 jobs in the previous month. Although these figures represented a deceleration from the preceding month, they were higher than initially forecasted.
Wall Street analysts drew breaths of relief at any indications that the economy could be successfully navigating the uncertainty brought about by the new tariff regimes. Earlier data released last Wednesday by payroll company ADP revealed an unexpected decrease in private-sector recruitment. However, the contrastingly positive labor report on Friday was a sign that the economy might not be as precarious as feared.
Regardless, concerns persist over how Trump’s economic policies, particularly regarding tariffs, could trickle down to affect economic growth and business operations in the near future. Experts predict a lag of a few months before the full influence of the tariffs on business plans, workforce recruitment, and inflation become evident in economic reports.
Leading the rebound were stocks such as Tesla (TSLA), which saw a significant 5.5% rise, bouncing back from a substantial decline the preceding day. Tesla had suffered a severe blow on Thursday, plummeting 14% after President Trump and CEO Elon Musk exchanged unfavorable remarks. This decline resulted in an approximately $152 million deduction from Tesla’s market value, marking the company’s greatest single-day value loss in its history.
On Friday, President Trump further fueled speculation by stating he was ‘not even considering Elon’ and that he wouldn’t engage with him ‘for a bit.’ He added, expressing his concern, ‘He’s got an issue. The poor man’s facing an issue.’
In other market movements, bond yields underwent an increase on Friday, as market players adjusted their rate-cut anticipations from the Federal Reserve for the year. A stable labor market provides the Federal Reserve with more leeway to maintain the current rates. The probability of a rate cut by the Fed in the following month dropped to 16% from 30% a day earlier. The yield on the 10-year U.S. Treasury rose to 4.5% and that on the 30-year U.S. Treasury increased to 4.96%.
Investors have been leaning towards the ‘TACO’ trade in the past few weeks, essentially betting that ‘Trump always chickens out’ on his fiercest tariff warnings. The financial world will be keenly monitoring the forthcoming meeting between U.S. and Chinese officials on Monday.
Furthering tensions, Trump independently elevated tariffs on steel and aluminum imports to 50%, up from 25%, effective from Wednesday. Showing resilience, Wall Street essentially shrugged off these tariffs, as these were largely expected, and rallied in spite of their enforcement.
Lastly, U.S. stocks have experienced their most triumphant monthly surge since November 2023, as Wall Street consistently rises from the abyss of Trump’s tariff unpredictability. This month, the S&P 500 has increased approximately 1.6%.