MAY 9 – Wall Street’s major indexes advanced for the third consecutive session on Friday, buoyed by investor optimism surrounding an upcoming high-level meeting between the United States and China. This sustained rally highlights the market’s renewed confidence in potential progress on trade negotiations between the world’s two largest economies.
The stock market initially wavered early in the day, as U.S. President Donald Trump made assertive remarks about trade policy. He emphasized the need for China to further open its markets to American businesses and stated that 80% tariffs on Chinese imports “seems right.” Although such a figure is significantly higher than the current 145% rate, many investors viewed these comments as part of a broader negotiation tactic rather than an imminent policy shift.
Despite the initial dip, markets rebounded, with traders interpreting Trump’s stance as part of a larger strategy to pressure Beijing ahead of the weekend summit in Switzerland. Delegates from both nations are expected to engage in in-depth discussions focused on reducing tariff barriers and calming trade tensions that have weighed heavily on the global economic landscape.
Positive Sentiment Drives Market Recovery
Investors largely welcomed the prospect of dialogue, with the belief that the meeting could yield tangible steps toward resolving the ongoing trade dispute. The conflict has not only disrupted global supply chains but also clouded business investment decisions across multiple sectors.
“People expecting a deal to materialize instantly at such high tariff levels are missing the point,” said Thomas Hayes, chairman of Great Hill Capital. “It’s a process, and although the numbers being floated are steep, the very fact that talks are resuming is an encouraging signal.”
The market’s gains also followed the news of a successful trade agreement between the U.S. and the United Kingdom, marking a significant post-tariff development. This deal has lifted expectations that further negotiations with other nations could follow, potentially easing broader trade-related uncertainty.
In addition to developments on the U.S-China front, reports surfaced indicating that India has proposed a sharp reduction in its tariff gap with the U.S—offering to bring it down from nearly 13% to under 4% in hopes of gaining relief from American tariffs. While this news did not have an immediate market impact, it added to the overall optimism about potential trade breakthroughs on multiple fronts.
Indexes Push Higher as Earnings Season Winds Down
By 9:45 a.m. ET on Friday, the Dow Jones Industrial Average (.DJI) was up 50.37 points, or 0.12%, bringing it to 41,418.82. The S&P 500 (.SPX) posted a gain of 15.49 points, or 0.27%, bringing it to 5,679.43. Meanwhile, the Nasdaq Composite (.IXIC) outperformed both, climbing 91.47 points or 0.51% to reach 18,019.61.
The energy sector led the rally among the 11 primary S&P 500 sectors, gaining 0.8%, fueled by strength in oil and gas shares. Consumer discretionary stocks also saw increased activity, with investment flows favoring growth-oriented segments. Financials, however, lagged for the week, showing some weakness as uncertainty lingered over future interest rate policies.
Although the S&P 500 and Nasdaq were on track for minor weekly losses, both indexes remain near levels last observed in late March. This recovery signals that investors have largely shrugged off the declines sparked by Trump’s recent tariff announcement, which he had labeled as “Liberation Day” for American industry.
On the economic policy front, Federal Reserve Governor Michael Barr commented that current trade strategies could lead to higher inflation, lower economic growth, and increased unemployment by the end of the year. His statement underscored the delicate balance policymakers must navigate between supporting growth and containing price pressures.
Despite those concerns, the earnings season has provided a cushion for the market. Approximately 76% of S&P 500 companies have beaten analysts’ earnings expectations, although many have refrained from offering full-year forecasts due to trade-related uncertainties.
In individual stock movements, Expedia (EXPE.O) saw its shares tumble by 8.8% after the travel booking firm missed quarterly revenue targets. In contrast, The Trade Desk (TTD.O) surged by 23.2% after reporting better-than-expected revenue and profit for the first quarter. Meanwhile, Insulet (PODD.O), a company specializing in insulin delivery devices, rose 18% after surpassing profit estimates in its latest report.
Market breadth remained positive throughout the session, with advancing issues outnumbering declining ones by a ratio of 2.68-to-1 on the New York Stock Exchange and by 2.01-to-1 on the Nasdaq. The S&P 500 recorded three new 52-week highs against one new low, while the Nasdaq tallied 25 new highs and 39 new lows.
As the week draws to a close, investor attention remains squarely focused on the upcoming talks between U.S. and Chinese officials. Any progress made over the weekend could set the tone for next week’s market action and potentially usher in a new phase of trade cooperation. While significant hurdles remain, the market’s current momentum reflects cautious optimism that meaningful progress is possible.