On Thursday, May 8, 2025, stock futures traded near the flatline as investors awaited further developments following a preliminary trade agreement between the United States and the United Kingdom. Futures tied to the Dow Jones Industrial Average fell by 52 points, or 0.1%, while Nasdaq 100 futures slipped 0.08%, and S&P 500 futures were off about 0.1%.
President Donald Trump announced this preliminary trade agreement, marking the first deal between the U.S. and a global trading partner since his "reciprocal" tariff announcement last month. While the details are still being finalized, Trump confirmed that a 10% baseline tariff will remain in place on the U.K. exports. Chris Zaccarelli, chief investment officer at Northlight Asset Management, commented on the significance of the agreement, stating, "While trade with the UK pales in comparison to trade with our neighbors to the North and South, and especially in comparison to China, it is an important test case and a model for what could be accomplished. If the administration can follow this up with additional agreements, it would go a long way toward healing a stock market that has been battered and bruised this year."
Following Trump's announcement, stocks rose to their session highs. He expressed optimism about upcoming trade talks with China, stating he anticipates U.S. negotiators will have a "good weekend" in discussions with Chinese officials. The major indexes ended the day off their highs, with the Dow advancing 0.6%, the S&P 500 adding nearly 0.6%, and the Nasdaq Composite climbing about 1.1%.
In a related development, Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are scheduled to meet with their Chinese counterparts in Switzerland over the weekend of May 10-11, 2025. Despite the positive news regarding the U.K. trade deal, Trump has maintained his 145% tariff on China, issuing a 90-day pause on higher rates for most countries last month.
As the week progresses, the S&P 500 is on pace for a 0.4% decline, while the Nasdaq is on track to drop 0.3%. The Dow, however, is showing a modest gain of 0.1%, heading for its third positive week in a row.
In the wake of the trade agreement, leadership-quality stocks showed a mixed performance on Thursday. Nonetheless, the major indexes enjoyed substantial gains, buoyed by the news of the U.S.-U.K. trade deal, which potentially averts steep tariffs that could have negatively impacted both economies. Boeing (BA) emerged as a notable winner from the new agreement, leading the Dow Jones Industrial Average with a 3.4% advance.
The overall sentiment in the market reflects cautious optimism as investors weigh the implications of the U.S.-U.K. trade agreement against ongoing tensions with China. The trade deal is seen as a potential stepping stone for further negotiations, and many are closely monitoring how these developments will unfold in the coming weeks.
As the situation evolves, market analysts are keeping a keen eye on the stock performance of companies like Boeing, which are likely to benefit from increased trade activity. The mixed bag of leadership-quality stocks suggests that while some sectors may thrive under the new agreement, others could still face challenges depending on how the broader trade landscape develops.
In conclusion, the stock market's reaction to the U.S.-U.K. trade deal highlights the fragile nature of investor confidence amid ongoing trade negotiations. With key meetings scheduled in Switzerland and the potential for further agreements, the coming days will be crucial for determining the direction of the market and the economy as a whole.