At the end of a week dominated by a highly charged Federal Reserve meeting, markets were slipping after a rate-cut rally the previous session pushed the three main indexes to record highs. Attention will now turn to U.S.-China trade talks and an expected phone call between President Donald Trump and his Chinese counterpart Xi Jinping.
Stock futures tracking the Dow Jones industrial Average were down 60 points, or 0.1%. Those tied to the S&P 500 and Nasdaq 100 were also down 0.1% in early trading Friday. All three finished at all-time highs in the previous session.
Thursday’s session was a victory for the small-caps with the Russell 2000 jumping 2.5% and closing at a record for the first time since Nov. 8, 2021, according to Dow Jones Market Data. Tech stocks also rallied, led by Intel, after Nvidia announced it would invest $5 billion in the struggling chip maker and partner with it to co-develop “multiple generations of custom data center and PC products.”
The Fed’s decision Wednesday to cut interest rates for the first time in nine months and signal that two more could be coming this year was seen as labor fears winning a tug of war with stubbornly high inflation. But the effect of global tariffs has yet to be fully realized and remains a concern for markets. To that end, the ongoing trade talks between the U.S. and China remain in sharp focus and there are several other market pieces being used as pawns in negotiations between the world’s two largest economies.
Trump and Xi are expected to talk at 9 a.m Eastern time, according to several reports. It is seen as a precursor to a broader trade deal after an escalation in tensions in April led to triple-digit tariffs and restrictions on critical minerals access for the U.S. and technology and other goods for China.
It’s been a turbulent week for the negotiations. Trump hinted an agreement to keep popular short-video platform TikTok running in the U.S. would be coming soon but that was before Beijing banned the use of Nvidia’s chips by the country’s companies including TikTok owner ByteDance. Market watchers will be on red alert for any further developments between the two powers.
On Monday, U.S. trade negotiators reached a framework agreement with their Chinese counterparts for ByteDance to divest its social media app TikTok to U.S. owners. Details weren’t disclosed, and the deal was subject to the approval of both leaders. The framework agreement calls for a U.S. consortium including Oracle to own 80% of TikTok, with the new company possibly licensing ByteDance’s technology and then re-creating the algorithm that has made the app so valuable, according to press reports. The data would be managed by Oracle, which has been in a partnership with TikTok to do so.
Also in focus today will be a speech by Mary Daly, president of the Federal Reserve Bank of San Francisco, who is attending an AI Implications for Workforce Development and Economic Mobility event. “The Fed’s ‘blackout’ period is now at an end, meaning we’ll receive not only remarks from 2027 voter Daly this evening, but should also at some stage get a statement from Gov. Miran explaining his dissent [at Wednesday’s rate decision],” said Pepperstone analyst Michael Brown in a note.
Stephen Miran passed a narrow Senate vote to join the Fed board a day before the monetary policy meeting after being picked by President Donald Trump. His was the lone dissenting voice—opting for a larger half-point cut rather than the quarter-point reduction agreed on by the other members.
U.S. Treasury yields were rising in early trade, adding to an increase on Thursday, with the benchmark 10-year up 0.02 at 4.127. The dollar was continuing its resurgence after hitting a two-month low at the start of the week. The DXY index was rising 0.1% against a basket of currencies.