China’s Possible Trade Talks Impact Market Volatility

May 2, 2025

Friday’s Markets
S&P 500 5,604 (+0.63%)
Nasdaq 17,711 (+1.52%)
Dow 40,753 (+0.21%)
Bitcoin $96,813 (+2.3%)

1. China Contemplates Trade Talks

According to China’s Commerce Ministry, the country is considering initiating trade talks with the U.S. This development indicates a potential easing of tensions between the two nations. Following the announcement, futures on the S&P 500 rose, and Hong Kong’s Hang Seng index increased by over 1.5%.

• “The first rain after a long drought.” John Gong, a former consultant to China’s Commerce Ministry, remarked that this shift in tone signals approval from top leadership in China.
• “It should show its sincerity and be prepared to correct its wrong practices and cancel the unilateral tariffs.” He reiterated that the current 145% import tariffs must be removed in order to proceed with discussions.

2. Tech Giants Face Market Setbacks

Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) both experienced declines exceeding 3% after market closure, despite reporting quarterly earnings that surpassed analyst expectations. Key segments fell short, raising concerns about tariffs.

• Import tax impact projected at $900 million: Apple CEO Tim Cook flagged tariff levies but expressed optimism, noting that most devices shipped to the U.S. in the upcoming quarter will come from India and Vietnam instead of China. However, the services division’s revenue was below projections.
• Disappointing second-quarter guidance: Amazon Web Services (AWS) saw a 17% revenue increase year-over-year, but this fell short of expectations, and a modest 6% rise in online sales revenue didn’t encourage investor confidence.

3. Nvidia’s Dispute with Anthropic

Nvidia (NASDAQ: NVDA) and Amazon-backed Anthropic are at odds over U.S. policies regarding chip export restrictions. This conflict could pose difficulties, as Anthropic relies heavily on Nvidia technology for its AI model development.

• “American firms should focus on innovation rather than tall tales.” Nvidia responded to Anthropic’s claims about alleged Chinese chip-smuggling tactics.
• “America cannot manipulate regulators to capture victory in AI.” Tensions rise as Anthropic supports stricter export controls, while Nvidia, adversely affected by trade disruptions, vocally opposes regulatory pressure in the sector.

4. Upcoming Employment Report and Berkshire Hathaway Earnings

April’s nonfarm payrolls are expected to increase by 130,000, a decrease from March’s 228,000. The unemployment rate should remain steady at 4.2%, with average hourly earnings anticipated to rise slightly to 3.9% from 3.8%.

• Berkshire Hathaway (NYSE: BRK.B) is set to report earnings on Saturday. Investors are interested in how stock market volatility has influenced performance in core operating businesses, particularly insurance.
• ExxonMobil (NYSE: XOM) is projected to show a 15% earnings decline from last year when they release results before market open. Shareholders await insights following the largest monthly drop in oil prices since November 2021.

5. Thoughts for Investors

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This article was created using Large Language Models based on The Motley Fool’s investing insights. It has been reviewed for quality. Since LLMs cannot own stocks, they do not have positions in any mentioned stocks.