U.S. Stocks Fall Ahead of Trade Talks, Dow Drops 0.48%

U.S. stocks experienced a downturn, erasing earlier gains as traders adopted a cautious stance ahead of the upcoming trade talks between the U.S. and China. Despite some positive developments on the trade front, investors remained skeptical, leading to a decline in major U.S. stock indices. On Friday, May 9, the Dow Jones Industrial Average lost nearly 200 points, or 0.48%, while the S&P 500 fell by 0.24% and the tech-focused Nasdaq declined by 0.19%.

The market's focus is on the developments in the trade talks between the U.S. and China. U.S. President Donald Trump indicated his willingness to reduce tariffs on all Chinese goods to 80%, with the final decision resting with Treasury Secretary Scott Bessent. This rate, while still high for many exporters, is lower than the previous 145% tariff imposed earlier. Trump's statements suggest a shift towards de-escalation ahead of the critical trade negotiations, which could potentially lead to a reduction in reciprocal tariffs between the two nations. China had previously retaliated with a 125% tariff on U.S. goods.

Among the tech stocks, Palantir was one of the worst performers, dropping by 2.23% for the day. The stock is set to close the week down by 5% as investors reassess its high valuation. Notably, on Tuesday, Palantir's shares dropped by 12%, resulting in a loss of 35 million in market capitalization due to a decline in quarterly earnings.

Interestingly, shares of Strategy, a leveraged Bitcoin investment firm, were also down by 1.78% since the market opened. This decline occurred despite Bitcoin (BTC) posting a 1.23% increase over the last 24 hours and a 5% increase over seven days. The bearish sentiment in the stock market prompted many traders to increase their gold exposure. The precious metal was up by 1.16%, reaching $3,344 per ounce.