China trade talks, Apple/Amazon earnings, budget proposal - what’s moving markets
Investing.com - U.S. stock futures have traded higher Friday on signs of a thawing in tensions between China and the U.S., opening the possibility of talks aimed at ending the biter trade war. The monthly U.S. jobs report looms large, along with the Trump administration’s latest budget proposal, while investors will also digest earnings from tech giants Apple and Amazon.
1. Jobs report in focus
The week’s deluge of economic data culminates Friday with the release of the Labor Department’s closely watched employment report, with jobs growth likely to fall given the heightened economic uncertainty due to President Donald Trump’s aggressive tariff policy.
Nonfarm payrolls likely increased by 138,000 jobs last month after rising by 228,000 in March, while the unemployment rate is forecast to have been unchanged at 4.2% last month.
Average hourly earnings are forecast to have risen by 0.3%, matching March’s gain, resulting in an annual increase to 3.9% from 3.8%.
While the labor market continues to show resilience amid a reluctance by employers to let go of workers after struggling to find labor during and after the COVID-19 pandemic, warning signs are accumulating.
The payrolls reading will be the most recent reflection of heightened economic uncertainty in the U.S., even if a little backward-looking, following on from gross domestic product data that showed the U.S. economy unexpectedly contracted in the first quarter.
2. U.S. futures rise on China trade talk hopes
U.S. stock futures rose Friday, with sentiment boosted after China said it was considering potential trade talks with the U.S., raising hopes of a reduction in a bitter trade war between these two economic giants.
At 03:20 ET (07:20 GMT), the S&P 500 futures traded 33 points, or 0.6%, higher Nasdaq 100 futures gained 72 points, or 0.4%, and Dow futures rose 310 points, or 0.8%.
The main Wall Street averages started the new month on a positive note on Thursday, boosted by strong numbers from tech giants Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT).
All three indices are on pace for their second winning week in a row. The S&P 500 is on pace to rise 1.4% this week, the Dow Jones Industrial Average is up 1.6% and the NASDAQ Composite is 1.9% higher.
Sentiment was boosted Friday after China said it was evaluating the possibility of trade talks with the U.S., with China’s commerce ministry noting that Washington has sent signals through various channels seeking to start talks.
China added that if the U.S. wanted to talk, it must show sincerity and cancel the unilateral tariffs. China currently faces hefty tariffs totaling 145%, and has responded with a 125% duty on U.S. goods.
That said, the Trump administration also ended U.S. duty-free access for low-value shipments from China and Hong Kong on Friday, restoring an executive order from President Donald Trump in February.
This suggests any trade deal between the two largest economies in the world will involve a drawn-out, complicated negotiating process.
Elsewhere, nearly two-thirds of the S&P 500 constituents have now announced their results, with 76% posting earnings that have surpassed estimates, according to data from FactSet.
3. Guidance from Apple, Amazon dents sentiment
Quarterly results from the “mega-cap” tech giants continued after hours on Wednesday, and while both Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) beat expectations, their cautious guidance disappointed investors.
Apple’s results for the first quarter of the year were generally solid, but the iPhone maker trimmed its share buyback program by $10 billion, with CEO Tim Cook estimating that tariffs could add about $900 million in costs this quarter.
Cook also outlined changes to the company’s supply chain to minimize the impact of U.S. President Donald Trump’s trade war.
"We were expecting to see more buybacks. Knowing the company, this indicates that Tim Cook is hoarding cash for difficult times," said Thomas Monteiro, senior analyst at Investing.com. "While that’s not exactly a problem in itself, it certainly suggests that the company is not as certain about its near-term future as it was in previous quarters."
E-commerce giant Amazon on Thursday reported first-quarter cloud revenue growth and forecast operating income below estimates, disappointing investors.
Amazon Web Services, the company’s cloud unit, recorded a 16.9% increase in quarterly revenue, to $29.27 billion, growing at its slowest pace in five quarters.
Rival Microsoft, by comparison, reported on Wednesday it had exceeded estimates for its Azure cloud unit.
Both stocks fell in premarket trading, dampening sentiment after U.S. technology-related stocks, including many involved in artificial intelligence, rose sharply on Thursday following stronger-than-expected results from Microsoft and Meta Platforms late in the previous session.
4. Upcoming budget proposal
U.S. President Donald Trump plans to unveil his budget proposal for the 2026 fiscal year on Friday and send it to Congress, according to a White House official.
The annual White House budget request includes economic forecasts as well as detailed proposals about how much money should be spent by every government agency for the year that starts on October 1.
The Wall Street Journal reported that Trump is expected to propose slashing non-defense discretionary spending by $160 billion, targeting environmental programs, renewable energy, education, and foreign aid while boosting border security and defense.
The cuts are part of an effort led by the newly established Department of Government Efficiency (DOGE), headed by Elon Musk, which aims to trim $150 billion in the coming fiscal year and $1 trillion over time.
Trump’s proposal is expected to face significant opposition in Congress, despite Republicans holding narrow majorities in both chambers, setting the stage for months of negotiations over spending priorities.
5. Crude trades higher; weekly losses still likely
Oil prices rose Friday, ending a difficult week on a positive note on hopes of a scaling back in the bitter trade war between China and the U.S., the two largest economies in the world.
At 03:20 ET, Brent futures climbed 0.1% to $62.20 a barrel, and U.S. West Texas Intermediate crude futures rose 0.1% to $59.30 a barrel.
China’s commerce ministry said on Friday that the country was evaluating the possibility of trade talks with the U.S., although it emphasized that any dialogue must be sincere and preceded by the removal of unilateral tariffs.
The comments come after state media reported earlier this week that U.S. officials had reached out to China to open trade negotiations.
Both benchmarks are still set to post weekly losses of over 5% amid concerns that the broader trade war could push the global economy into a recession and crimp oil demand, just as the OPEC+ group is preparing to raise output.
(Reuters contributed reporting.)
