Wall Street Climbs as Washington Softens China Trade Tone

At the closing bell Friday, stocks were higher: the Dow rose +238.31 (0.52%) to 46,190.6, the S&P 500 added +34.94 (0.53%) to 6,664.01, and the Nasdaq Composite gained +117.44 (0.52%) to 22,680.0, while small caps lagged as the Russell 2000 slipped -1.61 (-0.66%) to 243.45. In commodities, Gold Dec ’25 traded at 4,238.10 (-66.50; -1.54%) and Crude Oil Dec ’25 was 57.19 (+0.20; +0.35%). The advance came as investors weighed signs that Washington and Beijing may be edging toward a softer trade tone—momentum that could carry into the next phase of negotiations over tariffs.

Hopes for U.S.–China Talks Steady Nerves

Bloomberg reported the next round of U.S.–China trade talks could come as soon as next week, with Treasury Secretary Scott Bessent saying he will speak with Vice Premier He Lifeng Friday evening. Bessent said that the two sides aim to meet in Malaysia “probably a week from tomorrow” to prepare for a presidential sit-down. The trade tone softened after President Trump called current high tariffs on Chinese goods “not sustainable” in a Fox Business interview—while also remarking to a reporter earlier in the week, “Well, you’re in one now,” when asked about a prolonged trade war.

Beyond geopolitics, earnings remain the market’s backbone. The year’s gains have been driven more by profit growth than by investors paying up for each dollar of earnings, according to Mike Dickson, head of research at Horizon. The Nasdaq 100 is up 16% with valuations up just 2%, the S&P 500 is up 13% with valuations up 3%, while the “Mag 7” and small caps have actually seen multiples compress—evidence that fundamentals, not exuberance, are carrying the load.

Big Tech on Tap

Tech Earnings loom large as investors look to the next two weeks of earnings reports. CFRA Sr. Research Analyst Angelo Zino expects Alphabet’s cloud arm to grow about 30% in Q3 and Q4, with a long-run path to 30%+ margins and 2025 capex of roughly $85 billion—likely exceeding $100 billion next year—as Google leans into AI infrastructure. Meta is seen growing 21%–22% in Q3 as it monetizes AI across advertising, messaging and devices, but CFRA also flags heavy investment—$66–$72 billion in 2025 capex, with an annualized run-rate near $100 billion—as a potential margin drag. Microsoft faces a litmus test on Azure, where growth near 37% is in focus alongside traction for Copilot, while Apple enters results with firmer margin visibility and early strength for the iPhone 17 cycle.

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For investors, the day’s takeaway is straightforward: any sign of détente between Washington and Beijing could ease a key overhang at a moment when corporate profit engines—particularly across Big Tech and AI infrastructure—are doing the heavy lifting. The market’s resilience hinges less on multiple expansion and more on whether those earnings—and capital-spending payoffs—arrive as advertised.