Stocks experienced a significant uptick on Friday as President Donald Trump announced that the next round of US-China trade talks is scheduled for Monday. Trump shared this update via social media, revealing that Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer will convene in London with their Chinese counterparts. The news contributed to the stock market rally, with the Dow Jones Industrial Average climbing 448 points, or 1.06%, during afternoon trading. Meanwhile, the broader S&P 500 rose by 1.15%, and the tech-heavy Nasdaq Composite gained 1.4%. Despite the positive movement, all three major indexes remained below their intraday highs following Trump's announcement.
In his post, Trump expressed optimism, stating, “The meeting should go very well.” This announcement comes amid an ongoing and challenging tariff war between the world’s two largest economies. Trump has been vocal about his intent to address what he perceives as unfair trade practices by the US's global partners. Notably, Trump and Chinese President Xi Jinping had a 90-minute conversation on Thursday, following which Trump indicated hope that the current trade tensions might soon be alleviated.
The stock market's upward trend was further supported by a better-than-expected jobs report released earlier that morning, which helped to calm concerns regarding the resilience of the US economy amid the early stages of Trump’s tariff policies. The S&P 500 managed to climb above 6,000 points, a milestone it hadn't reached since February. All three indexes—Dow, S&P 500, and Nasdaq—were on track for consecutive weeks of gains, reflecting a growing investor confidence.
Stock futures showed a positive trend early Friday after data from the Labor Department revealed that the economy added 139,000 jobs last month. Although this figure was a slowdown from the previous month, it surpassed analysts' expectations. Wall Street has been eagerly searching for signs of economic stability amidst the uncertainties generated by Trump’s tariffs. Moreover, data from payroll company ADP indicated an unexpected decline in private-sector hiring earlier in the week, but Friday’s Labor Department data provided a much-needed boost to market sentiment.
Glen Smith, Chief Investment Officer at GDS Wealth Management, commented, “While job growth decelerated in May, the payroll data came in above expectations and it is extremely encouraging to see a six-figure print during a time of significant uncertainty driven by tariffs and economic fears.” However, lingering doubts about the long-term impacts of Trump's tariff policies on economic growth and business activity remain. Analysts suggest that it may take several months before the full effects of tariffs become evident in economic data.
Steve Wyett, Chief Investment Strategist at BOK Financial, stated, “The deleterious impacts of uncertain tariff policies have yet to be fully reflected in the jobs data.” Among the stocks leading the rebound was Tesla (TSLA), which saw a 5.5% increase following a sharp decline the previous day. Tesla's stock had plummeted 14% after a social media exchange between Trump and Tesla CEO Elon Musk, resulting in a loss of approximately $152 million in market value—marking the largest single-day drop in the company’s history.
On Friday, Trump remarked to CNN’s Dana Bash that he was “not even thinking about Elon” and would not be speaking to him “for a while,” adding, “He’s got a problem.”
In addition to the stock market's positive performance, bond yields rose on Friday as traders adjusted their expectations for potential interest rate cuts from the Federal Reserve this year. A robust labor market gives the Fed more flexibility to maintain current rates. According to the CME FedWatch tool, the likelihood of a rate cut in July dropped from 30% to 16% in just one day, with traders now anticipating that the next potential cut may occur in September.
Analysts at Bank of America expressed confidence in their prediction, stating in a Friday note, “We remain comfortable with our view that the Fed won’t cut this year.” The yield on the 10-year US Treasury rose to 4.5%, while the yield on the 30-year US Treasury increased to 4.96%. It is important to note that bond yields and prices move in opposite directions.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, noted, “The Fed should be reluctant to cut rates because the full effects of tariffs haven’t impacted inflation numbers yet and the job market isn’t deteriorating enough to force their hand.”
As the upcoming US-China trade talks approach, investors have increasingly adopted a strategy dubbed the “TACO” trade, which reflects a belief that “Trump always chickens out” on his most aggressive tariff threats. Wall Street is keenly focused on the meeting scheduled for Monday, especially following Trump and Xi’s recent phone call. This long-anticipated discussion comes after weeks of rising tensions between Washington and Beijing.
Smith commented on the market's outlook, saying, “While there is still uncertainty over tariffs, the stock market is forward-looking and has been pricing in an eventual thawing of trade fears. It’s becoming clear that the rhetoric on tariffs is much tougher than the action.”
In a separate development, Trump raised tariffs on steel and aluminum imports from 25% to 50%, effective Wednesday, a move that Wall Street had largely anticipated, resulting in a rally despite the implementation of the new tariffs. Analysts at JPMorgan Chase commented in a Tuesday note, “There are no signs of a summer break from tariff drama.”
US stocks have recently shown strong performance, marking their best monthly gain since November 2023, as Wall Street continues to recover from the uncertainties created by Trump's tariff strategies. The S&P 500 has increased by approximately 1.6% so far this month. This remains a developing story, and further updates will be provided as new information becomes available.
