Expectations that trade negotiations between the United States and China would begin, coupled with strong non-farm employment figures, led to a simultaneous rise in the three major stock indices of the New York Stock Exchange.
On the 2nd (U.S. Eastern Time), the Dow Jones Industrial Average closed at 41,317.43, up 564.47 points (1.39%) from the previous day. The Standard and Poor’s (S&P) 500 index rose 82.53 points (1.47%) to close at 5,686.67, while the Nasdaq Composite rose 266.99 points (1.51%) to finish at 17,977.73.
In particular, the S&P 500 index rose for the ninth consecutive transaction day as of that day. According to Spectra Market, it is the first time since 2005 that the S&P 500 index has risen for more than nine consecutive transaction days.
The reason for the rise in the major stock indices is the anticipation surrounding U.S.-China trade negotiations. On that day, China’s Ministry of Commerce stated, “The U.S. has been actively communicating through officials several times recently and wishes to engage in dialogue with us.” Earlier, Chinese state-run social media (SNS) affiliated with CCTV reported that the U.S. was sounding out China about dialogue.
The day before, U.S. Secretary of State Marco Rubio noted in an interview with Fox News, “(The Chinese side) is reaching out” and added, “They want to meet and hold talks with (the U.S.).”
Previously, U.S. government officials, including President Donald Trump, had been saying that China wanted to engage in dialogue with the U.S. However, the Chinese government denied this, leading to a prevailing view that negotiations between the two countries were at a standstill. However, now that the Chinese government has officially indicated progress in bilateral relations, the stock market has continued to rise.
Moreover, the labor market data for April came out stronger than expected, adding further momentum to the rise in stock prices. The U.S. Department of Labor announced that non-farm employment in April increased by 177,000 from the previous month. This figure exceeds the market estimate of 130,000.
However, there are also growing expectations that the Federal Reserve (Fed) will delay the timing of interest rate cuts due to this news. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of the federal funds rate being held steady in June has risen to 64.5%, up from 41.8% at the close the day before, an increase of about 23 percentage points.
Meanwhile, all sectors saw gains in the stock market that day. Financials and communication services rose by more than 2%, while consumer discretionary, energy, healthcare, industrials, materials, real estate, and technology sectors rose by more than 1%.
The big tech corporations, known as the Magnificent 7, saw all members rise except for Apple and Amazon. Microsoft, Nvidia, and Tesla saw gains in the 2% range, while Meta Platforms increased by more than 4%. Broadcom also rose by over 3%, surpassing Tesla's market capitalization.
In contrast, Apple fell by 4%, and Amazon remained nearly flat. Apple reported earnings that exceeded market expectations, but selling occurred as sales from its key revenue source in Greater China came in lower than expected. Amazon also recorded strong earnings, but performance from its main revenue sector, Amazon Web Services, fell short of expectations, weakening investor sentiment.