Wall Street extends winning streak driven by tech and jobs, but Trump tariffs loom

The US stock market closed the week with strong gains, extending its positive streak thanks to solid earnings reports from tech giants like Microsoft and Meta , and a better-than-expected jobs report. However, uncertainty about Trump's tariffs persists.

Wall Street experienced a week of remarkable optimism, culminating in a historic run for the S&P 500 index.

On Thursday, the S&P 500 rose 0.6%, achieving its eighth consecutive gain, driven primarily by quarterly results from Microsoft (+7.6%) and Meta Platforms (+4.2%), which beat analysts' expectations thanks to strength in the cloud, artificial intelligence, and advertising sectors.

On Friday, the rally continued even stronger. The S&P 500 rose nearly 1.5%, marking its ninth consecutive gain, the longest streak in two decades. The Dow Jones added 563 points, also its ninth session of gains, and the Nasdaq climbed 1.5%. This final push of the week was due to two key factors:

• * Strong jobs report: 177,000 nonfarm jobs were created in April, exceeding expectations and bolstering confidence in the labor market.
• * Signs of trade easing: Beijing's willingness to resume trade talks with the US, conditional on a tariff reduction, has improved investor sentiment.

For the week, the S&P 500 gained 2.3%, the Dow gained 2.5%, and the Nasdaq gained 2.7%. The S&P 500 is now less than 9% from its all-time high.

Despite the strong stock market performance, considerable uncertainty remains about whether the trade war fueled by President Donald Trump could tip the economy into a recession.

• * Business Impact : Although first-quarter earnings were better than expected, many CEOs remain cautious. General Motors (GM) cut its 2025 profit forecast, anticipating a $4-5 billion impact from tariffs. McDonald's reported weak revenue, with its CEO citing the "uncertainty" facing consumers. Apple warned of a potential $900 million hit from tariffs, sending its shares down 3.7% on Friday.
• * Mixed data: Jobless claims were higher than expected last week. Although US manufacturing activity contracted in April, it was better than feared. Factory orders rose 4.3% in March, possibly due to advance buying ahead of the April tariffs. Fears of "stagflation" (a stagnant economy with high inflation) persist.
• * Tariff Policy: The Trump administration eliminated tariff exemptions for low-cost goods from China, which could raise consumer prices. Reciprocal tariffs on many countries were paused, but were raised to 125% for China. Mexico benefits from auto parts exemptions under the USMCA, but faces broader uncertainty.

• * Interest Rates: The 10-year Treasury yield rose to 4.21% on Thursday. A preferred measure of inflation by the Fed, the yield slowed in March.
• * Global Markets: Tokyo's Nikkei rose 1.1% after the Bank of Japan's decision to hold interest rates. Many markets were closed for Labor Day.
• * Corporate News: Warren Buffett announced he will step down as CEO of Berkshire Hathaway at the end of 2025. Bill Gates weighed in on the Trump administration and Elon Musk's role. South Korean exports beat forecasts thanks to chip growth, but the outlook is uncertain.

"Consumers are 'dealing with uncertainty.'" – Chris Kempczinski, CEO of McDonald's

The market appears to be celebrating the positive corporate and labor market news, but trade policy remains a dominant risk factor that could derail the economic recovery.