It’s been a wild ride on Wall Street lately—$6 trillion wild. But as we rolled into the weekend, the party music faded and the market caught its breath. Stocks and bonds seesawed through Friday as investors braced for the next big headline out of Washington or Beijing.
This isn’t just any old market wobble. After a staggering surge from bear market territory, the S&P 500 basically stood still to close the week—flat, no fireworks, just a deep inhale. Why? Two words: Trade talks.
Skepticism in the Air as U.S.-China Talks Begin
Investors are holding back like someone dipping their toe into a pool that might be ice cold. Sure, there’s hope that the weekend negotiations between American and Chinese officials might thaw the frost a bit. But don’t bet your portfolio on a swift handshake and a press conference with grins.
The buzz around Wall Street? This is going to be a drawn-out tango. Officials from both sides may start talking, but actually reaching a deal, especially one that goes beyond headlines and into real economic policy, is going to take time.
Markets Looking for a Break in the Clouds
Global traders are glued to the headlines, scanning for any clue that this never-ending tariff saga might ease up. But then President Trump goes and throws another log on the fire, floating the idea of an 80% tariff on Chinese imports right before the talks.
Classic Trump. Bold move, maybe strategic, definitely headline-grabbing. But it makes investors nervous, to say the least.
“This weekend’s developments will probably be binary for markets,” said Jose Torres over at Interactive Brokers. “But don’t expect a miracle. It’s going to be a lot of back and forth—ups and downs—before we get close to a real deal.”
America’s Trade Hit List Gets Wider
Sources say Trump’s trade squad has about 20 countries in their early sights. We’re talking heavyweights like Japan, South Korea, and Vietnam, all significant sources of U.S. imports. But also smaller players like Fiji, Lesotho, and Mauritius are apparently on the radar.
A wide net, no doubt. And it’s all part of a push to shrink the U.S. trade deficit, especially with nations where the numbers haven’t favored the U.S.
No Fireworks in the Indexes
Let’s talk numbers. The Nasdaq 100 barely moved. The Dow Jones dipped a modest 0.3%. Over in Europe, Germany’s DAX managed to climb back to where it was before the trade war rattled markets.
Yields? The 10-year Treasury yield clung to 4.38%. The Bloomberg Dollar Spot Index lost 0.2%—though still managed to put in its strongest week since March.
Wall Street Big Shots Remain Cautious
Barry Sternlicht, billionaire and head honcho at Starwood Property Trust, sounded a note of caution on Friday.
“Markets bounced back—surprisingly—to pre-Liberation Day levels,” he said. “But honestly? It feels off. Travel’s down. Something’s not clicking.”
And with U.S.–China talks underway, the stakes couldn’t be higher. According to Bloomberg Intelligence, companies in the S&P 500 made around 6.1% of their 2024 revenue from China. That’s a lot of earnings that could vanish if things go south.
“If there’s a full-on decoupling from China,” wrote Torsten Slok, Apollo’s chief economist, “S&P 500 profits could take a serious hit.”
Red Flags from the Equity Market Regime Model
Here’s where it gets really interesting. Bloomberg’s Equity Market Regime Model, which looks at market momentum, flipped into the “red zone” in March and April. That’s code for caution. Historically, this phase correlates with a 5.6% average drop in the S&P 500 over the next year.
The market’s at a crossroads, and both the bulls and bears are shouting over each other.
“Bulls see fading uncertainty, improving trade dynamics, and stronger-than-expected earnings,” said Mark Hackett at Nationwide. “But the bears? They’re pointing to declining earnings momentum and shrinking forecasts.”
The Fed Is Watching—and Waiting
Friday was quiet in terms of hard economic data, so investors turned their ears to the Fed.
Adriana Kugler of the Fed suggested keeping interest rates steady, especially with so much unknown around tariffs. Meanwhile, Michael Barr warned that bad trade policy could spark inflation and layoffs. And over at the Richmond Fed, Tom Barkin chimed in to say that not every company can pass on tariff costs to customers.
Translation? The Fed doesn’t want to be caught off guard if this trade battle throws a wrench in the economy.
Corporate Watch: Who’s Moving, Who’s Stumbling
A few corporate headlines made waves:
- CrowdStrike is under investigation over a $32 million deal. Prosecutors want to know what the C-suite knew and when.
- SMIC, China’s top chipmaker, warned that sales could dip by 6% this quarter thanks to disruptions.
- TSMC, however, had a blowout April with revenue up 48%, likely a rush to buy parts before tariffs hit.
- Expedia cut its forecast for the year, citing weaker U.S. travel demand.
- Lyft beat expectations, putting some shine on an otherwise rocky rideshare sector after Uber’s weak results.
- IAG SA, the parent of British Airways, announced a $10 billion investment in long-haul aircraft—its largest ever.
Here’s How the Markets Wrapped Up
Stocks
- S&P 500: Flat
- Nasdaq 100: Flat
- Dow Jones: -0.3%
- Russell 2000: -0.2%
- Bloomberg Magnificent 7: +0.4%
- MSCI World: Unchanged
Currencies
- Dollar Spot Index: -0.2%
- Euro: +0.2% to $1.1256
- British Pound: +0.5% to $1.3311
- Japanese Yen: +0.4% to ¥145.30
Cryptocurrencies
- Bitcoin: +0.6% to $103,200.18
- Ether: +6.7% to $2,332.50
Bonds
- U.S. 10-Year Treasury: 4.38% (unchanged)
- Germany 10-Year: +3 bps to 2.56%
- UK 10-Year: +2 bps to 4.57%
Commodities
- WTI Crude: +1.7% to $60.94/barrel
- Gold: +0.7% to $3,328.68/oz
In short? Wall Street’s riding the brakes, waiting to see if the U.S.-China trade talks lead to breakthroughs—or breakdowns. For now, it’s a game of wait-and-watch, and no one’s taking big risks until they see how the cards fall.