Trump: "Comprehensive and All-Encompassing Agreement with the UK"
US and China to Hold First Talks This Week... Optimism for Tariff Negotiations
Fed Holds Rates Steady for Third Time Despite Pressure from Trump
Powell: "Tariffs Increase Risks of Inflation and Unemployment"
New Unemployment Claims Decreased Last Week
The three major indexes of the New York Stock Exchange opened higher on May 8 (local time). After President Donald Trump confirmed that the United States had signed its first trade agreement with the United Kingdom following the announcement of reciprocal tariffs, investors responded positively and buying momentum entered the market.
As of 10:03 a.m. on the New York Stock Exchange, the Dow Jones Industrial Average, which focuses on blue-chip stocks, was up 226.36 points (0.55%) from the previous trading day, standing at 41,340.33. The S&P 500, which tracks large-cap stocks, rose 32.74 points (0.58%) to 5,664.02, while the tech-heavy Nasdaq gained 143.65 points (0.81%) to trade at 17,881.81.
President Trump announced on his social media platform, Truth Social, that "today will be a very important and exciting day for the United States and the United Kingdom," and he previewed a White House press conference. He stated, "A comprehensive and all-encompassing agreement with the United Kingdom will solidify the relationship between our two countries for years to come," adding, "It is an honor to announce that, given our long history and alliance, the United Kingdom is our 'first' partner." If the US-UK trade agreement is signed, it will be the first deal following the White House's announcement of reciprocal tariffs against the world on April 2. In addition, the United States is set to hold its first trade talks with China, with whom it has been at a stalemate in the tariff war, on May 10 in Switzerland. Among investors, optimism is growing that the tariff war may de-escalate.
Matt Maley, chief strategist at Miller Tabak, said, "Once we learn the details of today's trade agreement and see how much progress the United States and China make toward the most important trade agreement this weekend, investors will have a clearer understanding of how much trade issues will impact the US and global economies going forward."
News that the Trump administration may ease the export controls on artificial intelligence (AI) semiconductors, which were introduced during former President Joe Biden's administration, is also fueling buying activity.
Investors have digested the week's major event, the Federal Open Market Committee (FOMC) meeting, held the previous day. As expected, the Fed kept the federal funds rate unchanged for the third consecutive time at 4.25-4.5% per year. The FOMC policy statement noted, "Uncertainty about the economic outlook has increased further," and added, "The committee is paying attention to both sides of its dual mandate (price stability and full employment), and the risks of rising unemployment and inflation have increased." It was assessed that concerns about stagflation (rising prices amid economic stagnation) due to uncertainty in tariff policy have been confirmed. Fed Chair Jerome Powell also said at a press conference immediately following the FOMC, "Given the scope and scale of tariffs, the risks of inflation and rising unemployment are certainly increasing," adding, "My gut feeling is that uncertainty about the future economic path has become extremely high. There is no need to rush (rate cuts)."
The number of new unemployment claims decreased after a sharp increase the previous week. According to the US Department of Labor, for the week from April 27 to May 3, the number of new unemployment claims was 228,000, down 13,000 from the previous week's revised figure of 241,000. This was also below the market forecast of 231,000. The surge in unemployment claims at the end of April, which coincided with New York City's spring break and Easter, was thus offset by a decrease within a week. The number of continuing claims, which counts those receiving unemployment benefits for at least two consecutive weeks, was 1,879,000 for the week of April 20-26, lower than both the previous week's revised figure of 1,908,000 and experts' forecast of 1,890,000.
By stock, Tesla was up 1.84%. Microsoft (MS) was rising by 0.87%, while Meta, the parent company of Facebook, and Amazon were up 0.64% and 0.63%, respectively.
US Treasury yields were slightly higher. The yield on the 10-year US Treasury, the global benchmark for bond yields, rose by 1 basis point (1bp = 0.01 percentage point) from the previous day to 4.28%, while the yield on the 2-year Treasury, which is sensitive to monetary policy, was up 2 basis points from the previous day at around 3.81%.
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