By Amanda Cooper
LONDON (Reuters) – What matters in U.S. and global markets today by Amanda Cooper.
The stock market is a little on the weaker side today, with U.S. futures mostly steady, as investors take a breather from this week’s blistering rally. Global trade tensions might finally be easing, money is flowing back into the glittering AI sector and the prospect of potentially bullish Federal Reserve rate cuts is back on the table.
Mike is out today, but check out his latest column to find out why U.S. budget anxiety could quickly replace the trade war tensions.
Today’s Market Minute
* President Donald Trump kicked off his trip to the Gulf on Tuesday with a surprise announcement that the United States will lift long-standing sanctions on Syria, and a $600 billion commitment from Saudi Arabia to invest in the U.S.
* Tesla plans to start shipping components from China to the U.S. for the production of Cybercab and Semi trucks from the end of this month, after the U.S. and China reached a truce over tariffs.
* How will the trade war de-escalation impact China’s mammoth manufacturing sector and the country’s energy needs? Read Reuters’ columnist Gavin Maguire’s latest piece to learn which key metrics you should be tracking.
* The fog of uncertainty created by Trump’s trade war may be lifting, but it’s leaving investors with a lingering question: what was the point of all that chaos around what the president termed “Liberation Day”? Check out Jamie McGeever’s analysis in his latest column.
* The comprehensive trade deal announced by the U.S. and UK governments last week was a damp squib, but that shouldn’t worry Downing Street. The bigger prize is closer collaboration with the European Union, and that could accelerate after the UK-EU summit next week. Find out more in the column from Panmure Capital’s Joachim Klement.
The Magnificent 7 Ride Back into Town
This week’s stock market rally could well go down in Wall Street history as one of the most epic on record. The S&P 500 is up by more than 20% in the 36 days since it hit a 15-month low on April 7. The index took just 16 days to hit the 20%-recovery-from-the-lows mark in 2020 and 18 days in 2009. The difference this time around is there is no tidal wave of monetary or fiscal stimulus helping to grease the wheels of the rally. The bulls aren’t just back, they’re in the driving seat and the Magnificent 7 – Apple, Amazon, Microsoft, Nvidia, Meta and Tesla – are the engine.
Investors have an affinity for shiny things. This week’s cocktail of market-friendly catalysts, including the 90-day halt to the U.S./China trade war, a benign reading of inflation and a raft of headline-grabbing investment deals from the Middle East, where Trump happens to be visiting, have set the stage for Mag 7 mania once again.
Nvidia has announced it will sell hundreds of thousands of its artificial intelligence chips in Saudi Arabia. Chip designer Advanced Micro Devices has unveiled a $10 billion collaboration with Humain, the Saudi sovereign wealth fund’s newly minted AI startup, while the Saudi government itself made a commitment to Trump to invest $600 billion in U.S. companies.
If the Mag 7 were a major drag on the broader S&P on the way down earlier this year, they’re proving to be a major boon on the way back up. Most world indices have recovered the bulk of the losses triggered by the April 2 “Liberation Day” sell-off. Since then, the Roundhill Magnificent 7 exchange-traded fund has gained 11%, far outpacing the 4.5% rise in the S&P 500 since then. By contrast, the equal-weight S&P, which strips out the oversized influence of the megacaps, is barely up 1%.
Tesla has rejoined the $1-trillion club this week, having dropped out in late February, while shares in Nvidia, whose name has become synonymous with the AI boom, have gained nearly 18%.
Chart of the day
Zooming out, so far this year the Mag 7 are lagging the rest of the market. But at this rate, they’re not only catching up, they’re powering the May rally.
Today’s events to watch
* Trump tours the Middle East; Gulf Cooperation Council takes place in Riyadh, Saudi Arabia
* Federal Reserve Board Governor Christopher Waller addresses an event in Rabat, Morocco
* Federal Reserve Vice Chair Philip Jefferson speaks on the economic outlook
* Federal Reserve Bank of San Francisco President Mary Daly participates in fireside chat before the California Bankers Association
* Cisco Systems fiscal Q3 2025 earnings after the bell
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Writing by Amanda Cooper, Editing by Anna Szymanski)
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