Meanwhile, shares of Google-parent Alphabet leapt 4.7% in premarket trade after the company reported upbeat first quarter (Q1) results, easing investor worries about returns on hefty artificial intelligence-focused investment.
US President Donald Trump said his administration is talking with China to strike a tariff deal and that Chinese President Xi Jinping has called him, according to a Time magazine interview published today, as Beijing continues to dispute the US characterisation of talks.
“He would consider it a victory if the US had 50% tariffs on foreign imports a year from now,” Trump said in the interview.
Futures reversed early gains as Trump’s comments offset some optimism after China granted some US imports exemptions from its hefty 125% tariffs, according to businesses notified.
Despite signs from the world’s biggest economies that they were worried about the ramifications of the trade war, market sentiment remains cautious given the changing nature of Trump’s policies, indications of a souring economic outlook and hits to company earnings and outlook from tariffs.
“Trump could easily turn markets back on their head with a single remark, but for now, we can embrace a moment of calm,” said Russ Mould, investment director at AJ Bell.
“While tariffs are unlikely to go away completely, any easing of the trade war will be lapped up by financial markets,” Mould said.
Alphabet’s Q1 results also lifted social media companies after strong Google ad revenue, with Meta Platforms up 2.8% and Pinterest gaining 2.6%.
At 6.34am, Dow E-minis were down 117 points, or 0.29%, S&P 500 E-minis were down 5.25 points, or 0.1% and Nasdaq 100 E-minis were down 39.25 points, or 0.2%.
Wall Street’s main indexes were set for strong weekly gains after signs of a possible detente in the US-China trade war and Trump’s backtracking on threats to fire the head of the Federal Reserve, as well as some upbeat corporate results.
Indexes rose for the third consecutive session yesterday, the best winning streak for the S&P 500 since Trump’s April 2 “Liberation Day” tariff announcement.
The S&P 500 is so far up 3.8% for the week, while the Nasdaq Composite and the Dow are on track to rise 5.4% and 2.4%, respectively.
Volatility has also eased this week, with the CBOE Volatility Index falling to its lowest level since April 3.
“Short-covering was also boosting equities,” analysts at Societe Generale said.
The benchmark index remains below levels prior to the April 2 announcement, and is over 10% off its February record close.
Intel dropped 7% following the chipmaker’s dour forecast, while T-Mobile fell 5.3% after adding fewer wireless subscribers than expected in Q1.
The data docket is light, with the final reading of the University of Michigan’s April consumer survey due at 10am.