U.S. stocks wavered Friday morning as investors digested mixed signals from Washington ahead of key trade talks with China this weekend. President Trump floated the possibility of lowering tariffs on Chinese imports, spurring cautious optimism but failing to sustain early gains.
By midday, the Dow Jones Industrial Average (DJI) was down 0.26%, reversing earlier strength. The S&P 500 (GSPC) edged 0.04% lower, while the Nasdaq Composite (IXIC) hovered near flat, slipping just 0.01%. Markets appeared hesitant as hopes for de-escalation clashed with Federal Reserve warnings about the inflationary risks of Trump's tariff policy.
Market Movers:
- Tesla (TSLA) +5.25%: Tesla shares surged as high as 7% intraday, making it the top-performing "Magnificent Seven" stock. Investors piled in amid hopes that reduced trade tensions with China could benefit Tesla’s Shanghai operations and export pipeline, particularly if tariffs ease further.
- Pinterest (PINS) +10%: Pinterest jumped over 10% after issuing a bullish revenue outlook and reporting 570 million monthly active users. The strong performance assuaged concerns that economic uncertainty might weigh on digital ad spending.
- Lyft (LYFT) +16%: Shares of Lyft rocketed after Engine Capital ended its activist campaign and the company expanded its stock buyback program from $500 million to $750 million. The move reassured investors about Lyft’s capital discipline and long-term strategy.
- Expedia (EXPE) -10%: Expedia tumbled after posting revenue of $2.98 billion, missing estimates amid declining U.S. travel demand. The miss overshadowed international performance and raised questions about domestic consumer resilience.
- Palantir (PLTR) -3.11%: Palantir extended its volatile week, falling over 3% as investors continue to grapple with valuation concerns following a mixed earnings report. Despite earlier gains this week, the stock is set to close the week down roughly 5%.
Trade Talks and Tariff Whiplash
Markets are on edge as Treasury Secretary Scott Bessent prepares for high-stakes negotiations with Chinese officials in Geneva this weekend. In a flurry of Truth Social posts Friday morning, President Trump proposed an 80% tariff on Chinese imports while touting “many trade deals in the hopper.”
Though the potential for easing tariffs fueled early gains, investors remain wary. Fed officials, including Governor Michael Barr and New York Fed President John Williams, warned that existing tariffs are already contributing to inflation and could slow growth. That tension between political optimism and economic caution is likely to define market sentiment in the days ahead.
Bitcoin Rally Reflects Risk Appetite
Bitcoin (BTC-USD) rallied more than 2% to trade above $103,000, briefly spiking past $104,000 overnight. The crypto surge coincides with increased appetite for risk assets as investors bet on deescalation in global trade tensions. Optimism was further boosted by news that Coinbase is acquiring Deribit, an options platform, for $2.9 billion—a sign of growing institutional interest in crypto derivatives.
Looking Ahead
Wall Street will remain fixated on the outcome of U.S.-China talks this weekend, with any signs of progress likely to set the tone for next week’s market action. Investors will also be watching for economic data releases and comments from Fed officials for further clarity on monetary policy. With earnings season winding down, geopolitics and inflation fears are poised to take center stage.