TheDrop Market Analysis, 05/02/25

Markets rose as investors saw tariff negotiations optimistically.

The Dow rose by 1.4%, the Nasdaq rose by 1.5%, and most surprising of all was the S&P 500, which rose by a staggering 1.5%, completely wiping all of their losses from Trump's tariffs. In addition, the Russell small business index rose by 2.3%. Gold and the USD (on the week, rather than on the day) both likewise grew in value, reflecting the universally positive sentiment in the market by not only stock traders but also forex & currency traders.

Markets surged because of two key factors. First of all was the commencing of tariff negotiations between the United States and China; both countries having both put into place steep rates on each other's goods, a unilateral agreement that could be reached between the two could be a great steppingstone into cooling trade war tensions. Secondly was a string of overperformances in earnings reports; many Mag. 7 companies like Microsoft and Meta beat expectations (with the exception of Amazon, which narrowly avoided its targets).

Evidently, Amazon performed the worst of the Mag. 7 with a 0.1% decline. On the other hand, Meta (4.3%), Microsoft (2.3%), Nvidia (2.6%), and Google (1.9%). Apple was the outlier, falling by a larger margin than Amazon had before it.