Stock Market Ends Lower Despite Positive US-UK Trade Deal Outlook
Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed lower after a lackluster trading session, even as optimism around a potential US-UK trade deal grew.
- The dip comes despite a strong recent rally, with both indices gaining over 10% between April 21 and May 2, highlighting investor caution as markets digest mixed economic and political signals.
- Weak sentiment may reflect a wait-and-see attitude among traders ahead of major macro developments.
US and UK Move Toward Trade Agreement
The Financial Times reported that the U.S. and the U.K. are expected to sign a trade agreement this week, with tariff exemptions for steel and cars taking center stage.
- In exchange, the UK will lower tariffs on U.S. agricultural and auto imports, and offer concessions on digital services taxes targeting foreign tech firms.
- The U.S. exported over 100,000 vehicles to the UK last year and remains the UK’s second-largest export market, reinforcing the trade relationship’s significance.
This development follows comments from Treasury Secretary Scott Bessent, who confirmed during an oversight hearing that the deal could be finalized within days.
- President Trump also hinted at a “very, very big announcement” on Truth Social, potentially linked to the agreement.
Trump and Canada’s Prime Minister Clash Over Trade
Trump met with Canada’s new Prime Minister, Mark Carney, but the meeting produced no trade progress.
- Ahead of the summit, Trump criticized Canada on Truth Social, questioning the U.S. subsidy of “$200 billion a year” and referencing “free military protection.”
- Carney responded bluntly, declaring that “Canada is not for sale” amid speculation about Trump’s previous remarks suggesting Canada could become the “51st U.S. state.”
The interaction underscores ongoing tensions between the two countries and a lack of forward movement on trade discussions.
- Diplomatic strain and conflicting views on sovereignty remain key obstacles to bilateral cooperation.
Atlanta Fed Raises GDP Forecast
The Atlanta Federal Reserve’s GDPNow model significantly raised its forecast for Q2 real GDP growth, revising its estimate to 2.2%.
- The increase comes just one day after a forecast of 1.1%, and follows an earlier figure of 2.4% on April 30, pointing to continued volatility in economic projections.
- The sharp revision suggests improving economic momentum, even as uncertainty remains around future monetary policy and inflation.
Mixed Earnings for HIMS and Palantir
Retail-favorite Hims & Hers Health (HIMS) saw its stock jump 18%, despite initially dropping 9%, after reporting a 111% increase in revenue.
- However, the company’s forward guidance fell short of analyst expectations, raising questions about the sustainability of its growth.
Palantir (PLTR) posted a double beat on both earnings and revenue, but the stock fell 12% as investors reacted to concerns over its lofty valuation.
- Still, PLTR shares remain up more than 40% year-to-date, reflecting strong investor interest in AI-driven analytics despite short-term corrections.
Despite positive economic signals and progress on trade, markets closed lower, suggesting that valuation concerns, political uncertainty, and earnings volatility are still key market drivers.
