Dow Jones Futures Loom As Bessent Claims 'Productive' U.S.-China Trade Talks; Tesla, Palantir, Alibaba Near Buy Points

The U.S.-China trade negotiations in Geneva, led by Treasury Secretary Scott Bessent, have injected cautious optimism into global markets, with Dow Jones futures edging higher amid whispers of potential tariff relief. While no formal agreement has been announced, Bessent’s emphasis on “de-escalation” and Switzerland’s proposed trade framework have investors eyeing opportunities in stocks like Tesla (TSLA), Palantir (PLTR), and Alibaba (BABA)—all hovering near strategic buy points.

The Trade Talks: A Fragile Path to De-Escalation

The talks, now in their second week, focus on rolling back punitive tariffs averaging 125%-145%—levels that have crippled $660 billion in bilateral trade. Bessent’s optimism contrasts with analysts’ skepticism: even a partial rollback to 45% tariffs by year-end could lift equities by 1-2%, while a “no deal” scenario risks a 3-5% Dow correction. Morgan Stanley warns that U.S.-China trade volumes could plummet 80% by late 2025 without progress, as China pivots to Southeast Asia, where April exports surged 8.1% year-over-year.

Tesla (TSLA): $275 Is the Inflection Point

Tesla trades at $298.26, near a critical crossroads. Analysts project a $300 year-end target, buoyed by Cybertruck production ramp-ups and strong EV demand. However, Q2 EPS is expected to drop to $0.46 due to lithium cost spikes and price cuts.

Buy Strategy: Accumulate below $275 for a rebound play or wait for a breakout above $320, which could signal a move toward $400, driven by autonomous driving advancements.

Risks: U.S. tariffs on Chinese-made components (e.g., batteries) could widen margin pressures.

Palantir (PLTR): $16 Is the High-Reward Entry

Palantir’s stock languishes at $18, near its 52-week low, despite Q3 FY2023 revenue growth of 16.8% to $558.2 million, fueled by defense contracts. Analysts at Wedbush see a $25 target by 2025, citing AI-driven demand in national security.

Buy Strategy: A dip below $16 offers a high-risk/high-reward entry, while a sustained close above $20 could trigger momentum buying.

Risks: Overreliance on U.S. federal budgets and regulatory hurdles in Europe.

Alibaba (BABA): $85 Is the Value Play

Alibaba trades at $90, a 31% YTD decline, despite Q2 FY2025 revenue growth of 7.6% to $33.7 billion. Its cloud division grew 7% QoQ, and its $50.2 billion net cash position and 8.38x forward P/E (vs. industry’s 24.63x) make it a compelling value pick.

Buy Strategy: Enter below $85 for a rebound toward $120, especially if China reaffirms its 5% GDP growth target.

Risks: Regulatory crackdowns and slowing Southeast Asian consumer spending.

Conclusion: Trade Talks Will Decide the Market’s Fate

Investors should prioritize $275 (TSLA), $16 (PLTR), and $85 (BABA) as entry points, but success hinges on the U.S.-China negotiations. A partial tariff rollback could unlock 1-2% gains in the Dow, while a stalemate risks broader market turmoil.

Alibaba emerges as the strongest risk-reward play due to its undervaluation and AI/cloud momentum. Tesla and Palantir offer higher beta opportunities but require tolerance for margin volatility and geopolitical headwinds. As Morgan Stanley’s Robin Xing advises, focus on “asymmetric payoffs”—waiting for a truce to materialize before doubling down on cyclical stocks.

With the Geneva talks still unresolved, patience—and a close eye on tariff developments—will be critical to navigating this volatile landscape.