Tech Giants Fuel Cautious Wall Street Recovery Amid Trade War Uncertainty

A stable week concludes with gains for tech stocks, as the rally of the strongest market group balances out conflicting messages surrounding President Donald Trump’s trade war, according to Bloomberg. The rise in Wall Street’s tech shares has set the S&P 500 on track for its biggest gain since January. Today (April 25), the Dow Jones rose by 0.09%, the S&P increased by 0.74%, and the Nasdaq index closed at +1.26%. Tesla surged by 10%, while Alphabet also gained due to solid results. Shares briefly lost their upward momentum as Trump hinted that a new delay on mutual tariffs is unlikely and that he wouldn’t leave Chinese tariffs without ‘something substantial’ in return. Bonds and the dollar also saw an increase. Analysts noted that markets are clinging to noise and being constantly whipped by Trump’s ever-changing statements. As traders weigh conflicting signals about whether the US-China trade dispute is de-escalating, Bloomberg News reported that Beijing is considering suspending a 125% tariff on some US imports. Trump told Time magazine he expects to finalize trade agreements with US partners seeking lower tariffs within three to four weeks. However, the president gave mixed messages regarding the status of talks with China, even as the Asian nation denies negotiations are ongoing. Market analysts have noted an impressive recovery from the turbulent start of the month, with investors encouraged by new developments in tariff negotiations. While investor fears around tariffs ease, economists continue to see headwinds. With profit margins near record levels, US companies have some room to absorb costs from higher tariffs. However, history suggests their ability to endure additional levies is fragile. Nearly all the profit margin growth derived from corporate sales in the S&P 500 since 2004 comes from the growing tech sector. Removing this group shows minimal profit growth. Analysts predict economic slowdown caused by tariffs, along with higher costs, will squeeze corporate earnings growth. However, the economy is expected to recover next year as businesses and consumers adjust to tariffs, aided by Federal Reserve rate cuts and tax policy certainty. Bank of America Corp. strategists led by Michael Hartnett advised selling rallies in US stocks and the dollar, noting a longer-term depreciation trend. This trend will persist until the Federal Reserve starts cutting rates, the US reaches a trade deal with China, and consumer spending remains resilient. Foreign investors have sold $63 billion worth of US stocks since early March, according to Goldman Sachs Group strategists, who noted European investors drove these sales while other regions continued buying US stocks. Analysts forecast that the trade war will impact economic growth this year and next, as tariffs raise prices and reduce consumer spending. The American economy is expected to grow by 1.4% in 2025 and 1.5% in 2026, down from 2% and 1.9% in last month’s survey. A survey among analysts indicates a 45% recession probability over the next 12 months, up from 30% in March.