Wall Street Ignoring Trade Turmoil, Tech Stocks Soaring
Pending Decision on Commission's Proposed Course of Action
In the midst of ongoing trade disagreements between the USA and China, Wall Street is showing a defiant stance, primarily focusing on tech stocks. Even with the looming uncertainty, investors are pouring their funds into technology companies, pushing the markets up.
The recent escalations in trade disputes from the White House didn't deter investors on Tuesday. Despite the announced tariffs, the Wall Street is rallying, led by the tech sector. The Nasdaq Composite has managed to bounce back for the year. While the tariff announcements from President Trump may have caused ripples, the question of attaining a final trade deal remains unresolved. Both countries have traded accusations of sabotaging agreements previously reached.
In the meantime, the Trump administration has given their trading partners a deadline of five weeks to submit their best offers for trade negotiations.
As market strategist Michael Brown of Pepperstone stated, "The jury's still out on how this will all play out, but at least on the China front, it seems like a high-level call might be needed to break the stalemate. Some in the Trump administration have suggested such a call could come this week."
At a press conference, White House spokeswoman Karoline Leavitt confirmed that the U.S. President and Chinese President Xi Jinping are set to have a phone call very soon. However, she did not provide a specific date.
The Dow Jones Index gained 0.5 percent to 42,520 points while the S&P 500 closed 0.6 percent higher, and the Nasdaq Composite rose 0.8 percent. The NYSE reported 1,916 advancers and 853 decliners, with 62 issues remaining unchanged.
Grim Economic Forecasts
Reports from the Organisation for Economic Co-operation and Development (OECD) indicate the trade dispute is causing significant damage to global economic growth projections. The organisation lowered its forecasts for this year and next due to heightened trade barriers and pervasive uncertainty. The U.S. specifically is among the most negatively impacted countries. Coincidentally, China has released subpar economic data.
Industrial orders in the U.S. dropped more than anticipated in April, and the number of job openings slightly increased in April.
Although bond yields were little changed, recovering from initial minor losses, UBS anticipates rising yields due to growth risks. However, analysts believe the yield won't drop below the 4 percent mark for the ten-year maturity in the near future.
A Strong Recovery for the Greenback
With a robust recovery, the dollar staged a significant comeback on Tuesday, with the dollar index rising 0.6 percent. The robust euro didn't provide the greenback much support, as a disappointing inflation data caused some pressure to the common currency. While the ECB anticipates a rate cut this Thursday, the new price data may increase expectations for further reductions, said traders.
The surge in the dollar weighed heavily on gold prices. The troy ounce dropped by 0.8 percent, nearing its recent multi-week highs. Gold remains a popular 'safe haven' amid ongoing trade conflicts.
Rising Oil Prices
Despite the gloom surrounding the economy, oil prices continued their upward trend. Both Brent and WTI notes increased by up to 0.9 percent. The possibility of a ceasefire in Ukraine becoming less likely led to additional Russian supply becoming less probable, traders explained. Additionally, the US Congress is planning new Russia sanctions targeting the oil sector.
Tech Stocks Gaining Momentum
Shares within the technology sector were highly demanded. Companies like Nvidia saw a 2.8 percent increase, Super Micro Computer gained 4.8 percent, and Micron Technology improved by 4.2 percent following a chipmaker announcement regarding a new AI-focused chip sample delivery.
Walt Disney saw a 0.6 percent gain as they announced plans to reduce their workforce to improve efficiency. Dollar General rose 15.9 percent due to a rosier outlook, and MoonLake Immunotherapeutics surged 18 percent following reports of takeover negotiations with Merck & Co.
Source: ntv.de, toh/DJ
(Enrichment Data: The U.S.-China trade tensions have temporarily eased with significant tariff rollbacks for a 90-day period, but ongoing uncertainties and lingering tensions continue to influence market sentiment, likely contributing to cautious or volatile performance among tech stocks.)
The Commission, recognizing the surge in tech stocks despite ongoing trade turmoil, is closely monitoring the activities within the technology sector. Despite mounting trade disputes, the finance industry is heavily investing in technology companies, such as Nvidia, Super Micro Computer, and Micron Technology, illustrating a paradigm shift in business priorities.
