Bullish Tech Stocks Ignore US-China Trade Dispute Uncertainty
Pending Decision on whether to Instigate the Procession
Currently, the US and China are set to discuss their ongoing trade dispute, leaving a cloud of uncertainty. However, Wall Street isn't letting that hold them back, especially when it comes to tech stocks. Despite the ongoing discussions, tech stocks are leading the way in gains on Wall Street.
The Nasdaq Composite has now returned to a positive trajectory since the start of the year, even after new tariff announcements by US President Trump. In the meantime, it remains unclear whether the US and China will reach a final trade agreement. Both sides have accused each other of undermining already agreed-upon deals. The Trump administration has, however, called on its trading partners to submit their best offers for trade talks within the next five weeks.
"The jury is still out on how this will all play out, but at least on the China question, it seems like a call at the leadership level might be necessary to break the impasse. Some in the Trump administration have suggested that such a call could come this week," said Michael Brown, a market strategist at Pepperstone.
At a press conference on Tuesday, White House spokeswoman Karoline Leavitt confirmed that US President Trump and Chinese President Xi Jinping will have a phone call "very soon." However, she did not specify the date.
The Dow Jones Index gained 0.5 percent to 42,520 points. The S&P 500 closed 0.6 percent higher, and the Nasdaq Composite rose 0.8 percent. Preliminary figures show 1,916 gainers and 853 losers on the NYSE.
Dismal Economic Prospects
The projections from the Organisation for Economic Co-operation and Development (OECD) show that economic hopes are being eroded by the ongoing trade dispute. The OECD has again lowered its forecasts for global economic growth in the current and coming years, citing increased trade barriers and persistent uncertainty. The US is particularly affected negatively, according to the OECD. Additionally, China has reported weak economic data.
Industrial orders in the US fell more sharply than expected in April. However, the number of job openings increased slightly in April. On the bond market, yields showed little change and recovered from initial moderate declines. The yield on ten-year US Treasury notes remained largely unchanged at 4.46 percent.
Gold and Oil Prices
The strengthening dollar weighed on the gold price, with the troy ounce depreciating by 0.8 percent to $3,353 after a significant increase the previous day. However, the precious metal remained near recent multi-week highs. The ongoing trade dispute continues to drive demand for gold as a "safe haven."
On the other hand, despite gloomy economic prospects, oil prices continued to rise. Notations for Brent and WTI increased by up to 0.9 percent. Low hopes for a ceasefire in Ukraine made additional Russian supply less likely, while the US Congress is preparing new Russia sanctions that could hit the oil sector.
Tech Stocks' Rise
The tech sector is in demand, with stocks such as Nvidia, Super Micro Computer, and Micron Technology experiencing gains. Nvidia shares rose by 2.8 percent, while Super Micro Computer gained 4.8 percent. Micron Technology improved by 4.2 percent after the chipmaker announced it had sent out the first sample of a new chip developed for AI applications in smartphones.
Companies like Walt Disney, Dollar General, and MoonLake Immunotherapeutics also saw gains. Walt Disney saw a 0.6 percent increase despite laying off hundreds of employees worldwide, while Dollar General rose by 15.9 percent after raising its outlook. MoonLake Immunotherapeutics climbed 18 percent following reports of takeover talks with Merck & Co.
In summary, while there is uncertainty surrounding the US-China trade dispute, tech stocks on Wall Street are rallying. The sector's reliance on global supply chains and markets means that any rise in tariffs or trade restrictions could have a significant impact. However, the temporary tariff reductions have provided some relief, and investor confidence seems to be driving gains in the tech sector.
The Commission (SEC or FTC) is closely monitoring the rising tech stocks on Wall Street, especially those like Nvidia, Super Micro Computer, and Micron Technology, in light of their recent gains despite the US-China trade dispute uncertainty. In the face of dismal economic prospects, finance leaders are keeping a close eye on tech stocks as they represent a significant portion of the business sector that heavily relies on global technology markets and supply chains.
