Tech Stocks Surging on Wall Street amid Trade Dispute Uncertainty
Decision on initiating the process still pending by the Commission.
The tech-savvy Wall Street is bucking the trend of unease surrounding the ongoing trade spat between the USA and China, with tech stocks attracting keen investor attention. Amidst the lingering uncertainty, the Nasdaq Composite has managed to recover from its previous year's deficit.
In light of the new tariff announcements from US President Donald Trump, the markets haven't shown signs of alarm. However, the question still looms over whether the two economic giants will finally reach a mutually agreeable trade settlement. The day before saw both nations accusing each other of jeopardizing already-agreed-upon deals. The Trump administration is urging its global trading partners to submit their best offers for tariff negotiations within five weeks.
Market strategist Michael Brown of Pepperstone highlighted, "The jury is still out on how this will all play out, but at least on the China question, it seems like a call at the highest level might be necessary to break the impasse" and suggested a possible phone call between Presidents Trump and Xi Jinping could occur this week to help find a resolution.
White House press secretary Karoline Leavitt hinted at an imminent phone conversation between the two leaders, without specifying a date. The Dow Jones Index rose by 0.5 percent to hit 42,520 points, while the S&P 500 ended 0.6 percent higher. The Nasdaq Composite increased by 0.8 percent.
Meanwhile, new forecasts from the Organisation for Economic Co-operation and Development (OECD) reveal the economic impact of the trade dispute. The OECD has revised its global economic growth estimates downwards due to increased trade barriers and persistent uncertainty, with the USA bearing the brunt of these negative effects. Additionally, China has published weaker-than-expected economic data.
Industrial orders in the USA plummeted more than anticipated in April, and job openings slightly increased in the same month. However, the bond market showed little change, with the yield on ten-year US Treasury notes remaining relatively stable at 4.46 percent. UBS anticipates further price declines and falling US yields due to escalating growth risks, though analysts believe the yield won't drop below the 4 percent mark for the ten-year period in the coming months.
Politically, Elon Musk voiced his disapproval of President Trump's proposed "Big Beautiful Bill," calling it a "disgusting abomination." Despite the gloomy economic projections, oil prices continued to soar. Currencies also played a part in market dynamics, with the strength of the dollar weighing on gold prices, while the dollar itself was strengthened by euro weakness.
In the tech sector, shares in companies like Nvidia, Super Micro Computer, and Micron Technology saw growth, with Micron Technology announcing the launch of a new AI-focused chip. Walt Disney and Dollar General also saw gains, and MoonLake Immunotherapeutics surged due to takeover speculation involving Merck & Co.
Insights:
- Long-term trade tensions may lead to cautious investor sentiment, affecting tech stocks despite temporary tariff reductions.
- The tech sector heavily depends on global supply chains and trade policies, so stable relationships are critical for sustainable growth.
- Possible phone conversations between Presidents Trump and Xi Jinping could play a significant role in resolving the trade dispute.
The Commission (OECD) revised its global economic growth estimates downwards, citing increased trade barriers and persistent uncertainty, with the finance sector potentially affected. Amid these uncertainties, technology-focused businesses, such as The Commission's patrol on companies like Nvidia, Super Micro Computer, and Micron Technology, still attract keen investor attention, with Micron Technology announcing a new AI-focused chip.
