Daily Fundamental Analysis: Stocks Rise on Hopes of a Trade Deal Between the U.S. and China
Key Takeaways:
- Apple and Amazon report better-than-expected results for the first quarter of 2025
- Optimism in the markets as China and the U.S. negotiate a trade deal
- Markets await crucial employment numbers today (Non-Farm Payroll)
China is evaluating U.S. trade negotiation proposals, as both nations seek to resolve their ongoing trade dispute affecting global markets. Senior U.S. officials have made multiple recent outreach attempts through intermediaries, according to a commerce ministry statement Friday.
China maintains that the U.S. must remove its unilateral tariffs as a prerequisite for talks, stating this would demonstrate Washington’s sincerity.
Trump has imposed 145% tariffs on Chinese imports, with China retaliating at 125%. Both sides have granted exemptions on critical products to minimize economic impact.
The yuan gained 0.14% to 7.2665 against the dollar, while Hong Kong’s Hang Seng index rose 1.6%.
Apple and Amazon beat Q1 2025 earnings expectations, joining Alphabet, Microsoft and Meta in strong performance last quarter, while Tesla continues working on full self-driving capabilities.
However, both companies showed weaknesses: Apple’s Services division missed estimates despite being their second-largest revenue source, while Amazon’s cloud division fell short of expectations for the third consecutive quarter.
The companies still expressed uncertainty about tariff impacts. Despite recent market enthusiasm for Microsoft and Meta, challenges remain ahead for Big Tech.
S&P 500 futures rose 0.68% Thursday evening on China’s potential U.S. trade talks. Dow Jones futures gained 0.82% while Nasdaq 100 futures added 0.32%.
Markets processed earnings from two “Magnificent Seven” companies ahead of Friday’s jobs report.
Apple fell 4% on weak Services revenue and $900M in expected tariff costs, while Amazon dropped 2% citing tariff concerns.
Investors are anticipating today’s jobs report to show 133,000 new payrolls in April, down from March’s 228,000, with unemployment stable at 4.2%. Recent economic data has been soft, with Q1 GDP contracting 0.3%, weak ADP payrolls, and jobless claims rising to 241,000.
