The mood for Wall Street next week will likely be set by talks in Switzerland over the weekend. Officials from China and the U.S., including Treasury Secretary Scott Bessent, are set to discuss the trade relationship between the two countries on Saturday. Investors will be looking for signs of quick progress, especially after President Donald Trump said Friday he was open to lowering tariffs on China to 80% from 145%. The S & P 500 has already rallied more than 13% from its April 8 lows, so the market may need a truly positive surprise on the trade front to take another big jump. “We continue to think much of this rally has been in anticipation of some de-escalation out of China, and as such when the actual news comes out the market reaction is likely to be lackluster and could even mark a tactical top, regardless of what the news is. This creates a very poor near-term risk/reward, in our view,” BTIG technical strategist Jonathan Krinsky said in a note to clients Friday. .SPX 3M mountain The S & P 500 has rebounded from its April 8 lows as tariff worries have declined. The U.S.-China trade talks follow the U.S. and U.K. agreeing to a trade deal framework this week. Stocks got a boost on the news Thursday, but the momentum didn’t carry over into Friday’s session. The major averages were little changed on the day, on track to post slight weekly declines. Inflation will be another key topic of the week, with the April reading for the consumer price index due out Tuesday. Wall Street would surely welcome another surprise decline as seen in the March reading. The CPI report, combined with the retail sales data and producer price index hitting on Thursday, will help give investors a better sense of how the ongoing trade tensions have fed into both inflation and the health of the consumer. “We think we’ll see some signs of tariffs affecting the data, mainly through higher car prices. Meanwhile, we expect decreases of 0.5% m/m in both retail sales ex-autos and the control group,” Adityah Bhave, U.S. economist at Bank of America, said in a note to clients Friday. On the earnings front, the first-quarter reporter season is winding down but there are some big reports still to come, including Walmart and Alibaba . With 90% of S & P 500 earnings reports already in, companies are beating estimates at an above-average rate, according to a Friday note from FactSet senior earnings analyst John Butters. However, those beats have come against the backdrop of analysts slashing their estimates. “It’s a recessionary kind of negative earnings revision environment,” Goldman Sachs chief equity strategist David Kostin said at an event for registered investment advisers on Thursday. To be sure, that doesn’t mean that a recession is priced in. Goldman’s baseline outlook is for the U.S. economy to “skirt” a recession, and the stock market could see a sizable drop if economic contraction does occur, Kostin said. Week ahead calendar All times ET. Tuesday 6am: NFIB Small Business survey (April) 8:30 a.m.: CPI (April) Thursday 8:30 a.m.: Initial jobless claims (week ended May 10) 8:30 a.m.: Retail sales (April) 8:30 a.m.: PPI (April) 8:30 a.m.: Empire State mfg index (May) 8:30 a.m.: Philadelphia Fed mfg index (May) 9:15 a.m.: Industrial production (April) 10 a.m.: Business inventories (March) 10 a.m.: NAHB survey (May) Friday 8:30 a.m.: Housing start (April) 8:30 a.m.: Import prices (April) — CNBC’s Michael Bloom and Fred Imbert contributed reporting.
China talks and inflation data could chart the path for stocks next week
May 9, 2025
