Stock Market Today: Dow Jones Dives Ahead of China Tariff Talks; Tesla Surges on Trade Optimism

The Dow Jones Industrial Average edged down 0.3% to 41,249.38 on May 9, 2025, as investors braced for high-stakes U.S.-China tariff talks beginning the following day. The S&P 500 dipped 0.1%, while the Nasdaq Composite held near flat, reflecting cautious optimism amid hopes of tariff relief. Tesla (TSLA) surged 4.7%, its third consecutive week of gains, while Apple (AAPL), Amazon (AMZN), and Broadcom (AVGO) inched higher. Yet, the broader market’s muted performance underscored lingering uncertainty over the talks’ prospects.

Dow’s Dip Reflects Trade Tensions

The Dow’s decline came despite a brief rally earlier in the session fueled by President Trump’s suggestion of lowering tariffs on Chinese goods from 145% to 80%. Federal Reserve Chair Jerome Powell tempered enthusiasm, however, noting that tariff-driven inflation and unemployment risks had yet to fully materialize. The 10-year Treasury yield inched up to 4.38%, signaling mixed investor sentiment about economic stability.

Tech Sector Mixed, but Tesla Shines

Tesla’s 4.7% jump brought its year-to-date decline to 25%, as traders bet on trade deal optimism outweighing concerns about its weakening sales in Europe and China. Meanwhile, Apple and Amazon rose modestly, but Nvidia (NVDA) and Alphabet (GOOG) dipped less than 1%, underscoring caution ahead of the tariff talks.

Tariff Talks: Hopes vs. Reality

The U.S.-China negotiations in Geneva, which began on May 10, 2025, face steep hurdles. The U.S. has imposed 145% tariffs on Chinese goods, while Beijing retaliated with 125% levies, effectively creating a mutual boycott. While Trump’s 80% tariff proposal signals flexibility, China seeks a 90-day tariff waiver and deeper concessions on issues like tech subsidies and fentanyl exports.

Historical distrust looms large. The 2020 “Phase One” deal, which collapsed due to noncompliance and pandemic disruptions, underscores the difficulty of resolving systemic issues. Analysts like Sun Yun of the Stimson Center caution that even modest tariff cuts would need to be reciprocal to avoid “empty words.”

Economic Pressures Mount

The Fed’s reluctance to cut rates—despite tariff-driven inflation risks—adds to market stress. Meanwhile, companies like Expedia (EXPE) and Affirm (AFRM) warned of tariff-induced consumer caution, with Expedia’s shares plummeting 7% after citing weak U.S. travel demand.

Global Spillover: Swiss Trade Tensions

The talks unfolded alongside U.S.-Swiss disputes, where Trump’s 10% tariff on Swiss goods (reduced from 31%) highlights his “America First” trade strategy. Switzerland, the U.S.’s second-largest European trade partner, avoided retaliation but faces economic strain in sectors like watches and chocolate.

Conclusion: Fragile Optimism, Persistent Risks

While markets are pricing in some tariff relief, a durable deal remains elusive. The Dow’s dip on May 9 and mixed tech sector performance reflect this duality. A 20% drop in Insulet (PODD) shares due to supply chain disruptions and a 14% plunge in Affirm after weak guidance further highlight the economy’s fragility.

The Fed’s warning about inflation and unemployment underscores that even a modest tariff cut may not offset systemic issues. With the U.S. trade deficit with China at $263 billion in 2024 and global markets hovering near four-year highs for oil ($61/barrel) and gold ($3,330/ounce), investors must weigh near-term optimism against long-term structural risks.

In this context, Tesla’s surge—a rare bright spot—suggests traders are placing bets on trade deal optimism outweighing reality, at least for now. But until the U.S. and China address core disputes like tech subsidies and intellectual property, markets will remain on edge.

Final trading data as of May 9, 2025, with key indices down slightly but poised for volatility as tariff talks dominate the week ahead.