U.S.-China Trade Talks Boost Dow Jones, S&P 500, and Nasdaq

U.S. stock markets saw gains on Wednesday as investors reacted to news of trade negotiations between the United States and China.

The S&P 500 increased by 0.32%, bouncing back after a series of downward trends.

In addition, the Nasdaq rose by 0.29%, and the Dow Jones Industrial Average surged more than 200 points, as investor attention turned toward the Federal Reserve’s expected interest rate decision later that day.

This upward momentum indicates that key U.S. indices are poised to end a two-day losing streak, which had been driven by ongoing tariff-related uncertainties.

Investor sentiment was further bolstered by reports of senior U.S. officials set to meet with their Chinese counterparts. Futures tied to the three major indices advanced as market participants welcomed the prospect of formal trade negotiations.

Historically, markets have responded positively to optimistic perceptions of U.S.-China trade discussions, and analysts mention that clarity on these issues would be advantageous. However, expectations that minimal progress will occur in the near term have somewhat dampened bullish feelings.

Investors are paying close attention to the latest developments regarding tariffs.

Significantly, new labor statistics from the Bureau of Labor Statistics indicated an increase of 177,000 jobs in April, exceeding expectations of 138,000, while the unemployment rate held steady at 4.2%. Despite this strong performance, tariff concerns linger.

Robert Kaplan, vice chairman of Goldman Sachs and former president of the Dallas Fed, expressed on CNBC’s ‘Squawk Box’ that resolving tariff issues is crucial for avoiding further economic slowdown in the U.S.

The market’s immediate focus is on the Federal Reserve, which is wrapping up its two-day meeting on May 7. The Fed’s policy decision and Chair Jerome Powell’s subsequent remarks will be vital for investors.

Markets have assessed a 96% likelihood that the central bank will keep interest rates unchanged, but all attention will be on Powell, especially regarding his insights into the U.S. economy and the Fed’s future interest rate projections.