Stock markets surge on tariff optimism and robust employment statistics
Stock Markets Soar as Trade War Hope and Strong Jobs Report Fuel Optimism
Friday saw Wall Street's main indexes surge to one-month highs, with signs of a trade war de-escalation between the U.S. and China and a robust jobs report easing concerns over the economic impact of tariffs.
Beijing announced it was "reviewing" a proposal from Washington to discuss President Donald Trump's 145% tariffs on China. The ongoing conversations between these world economic giants have left investors on tenterhooks, as both sides remain reluctant to appear to back down in the trade war that's been rocking global markets.
Fueling the positive mood further, data released on Friday indicated nonfarm payrolls grew more than anticipated in April, with the unemployment rate holding steady at 4.2%. Melissa Brown, managing director of investment decision research at Simcorp, commented, "This is solid employment data suggesting that the economy remains robust. As the true impact of tariffs becomes apparent, we may see these figures decrease, but for now, it's not apparent yet."
At 9:44 a.m. ET, the Dow Jones Industrial Average climbed 450.30 points, or 1.10%, to 41,203.26, the S&P 500 gained 59.98 points, or 1.07%, to 5,664.12, and the Nasdaq Composite leaped 162.22 points, or 0.92%, to 17,873.64.
**Wall Street Skyrockets as Microsoft, Meta Rocket****
With all indexes poised for weekly gains, the tech sector led the way, buoyed by strong performances from Microsoft and Meta. While Apple and Amazon stumbled slightly, it was minor setbacks in an otherwise overwhelmingly positive market sentiment. Apple faced a 4.6% decline following news that it had reduced its share buyback program by $10 billion, and CEO Tim Cook explained that tariffs could add around $900 million in costs for this quarter. Russ Mould, investment director at AJ Bell, observed, "Apple posted profits that probably wouldn't have impressed under normal circumstances, given uncertainties surrounding its product line and disappointing growth on the services side."
Amazon also experienced a marginal drop after forecasting Q2 operating income below estimates. Donald Trump's decision to rescind some tariffs has helped U.S. stock indexes recover from earlier losses, with the tech-heavy Nasdaq experiencing levels last seen since "Liberation Day" on April 2, when Trump announced sweeping global tariffs.
Although there are positive signs in the trade arena, the unpredictable nature of U.S. tariff policies has made some companies apprehensive about potential business impacts, or led them to withdraw earnings forecasts due to fear of increased costs and potential harm to economic growth. For instance, Chevron and Exxon Mobil experienced minimal fluctuations following their results, while Block's profit forecast for 2025 was reduced, leading to a 22% drop in its stock price.
Airbnb dropped 2.2% after signaling weakened demand in the U.S., while Take-Two Interactive declined 7.3% as the release of "Grand Theft Auto VI" was postponed until May 2026.
Stocks showing a positive momentum outpaced declining stocks by a rate of 5.73 to 1 on the NYSE, and 3.78 to 1 on the Nasdaq. As of May 2, 2025, the rally marks a 9th consecutive day of gains, demonstrating investor confidence in the prospect of trade war de-escalation. The S&P 500 recorded 7 new 52-week highs, while the Nasdaq Composite logged 28 new highs.
- Microsoft and Meta's strong performances propelled the tech sector, contributing to Wall Street's soaring stocks on Friday.
- Melissa Brown, an investment decision research director, commented that strong employment data indicates the economy remains robust, despite potential future impacts of tariffs.
- The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all rocketed to their highest levels in a month, with the Nasdaq reaching levels not seen since "Liberation Day" in April.
- Despite positive signs in the trade arena, companies like Block and Airbnb have faced apprehensions about potential business impacts from unpredictable tariff policies, leading to changes in earnings forecasts and stock prices.
- Russ Mould, an investment director, observed that Apple's profits would not have been as impressive under normal circumstances due to uncertainties surrounding its product line and disappointing growth on the services side.
- On May 2, 2025, Wall Street's rally marked a 9th consecutive day of gains, demonstrating investor confidence in the prospect of trade war de-escalation. The S&P 500 recorded 7 new 52-week highs, while the Nasdaq Composite logged 28 new highs.
