Key takeaways
- Trade optimism and tech earnings drove markets higher, with Dow up 3%, S&P 500 up 2.9%, and Nasdaq up 3.4%
- Four "Magnificent Seven" tech giants reported earnings with mixed results, showing early signs of tariff impacts
- Consumer spending slowdown hit restaurant chains, with McDonald's CEO describing a "divided U.S. economy"
Trade Developments Boost Market Sentiment
Positive trade signals helped lift markets this week despite ongoing concerns about Trump's tariffs. Commerce Secretary Howard Lutnick mentioned reaching a trade deal with an unnamed country, while there were indications of softening auto tariffs and potential warming relations between Washington and Beijing. Meanwhile, China's semiconductor industry continues advancing despite U.S. restrictions, as evidenced by Huawei preparing to test a powerful AI processor that could compete with NVIDIA's chips.
Mixed Results from Tech Giants
Microsoft and Meta delivered strong quarterly results midweek, driving significant market gains. Meta assured investors that growth would remain steady despite tariff concerns affecting digital advertising, while Microsoft indicated corporate clients weren't yet cutting technology budgets. However, enthusiasm dampened after Apple and Amazon reported. Apple warned that current tariff plans would add $900 million to quarterly costs, while Amazon's forecast ranges partially missed analyst expectations. The contrasting performances highlighted emerging tariff impacts on tech companies.
Consumer Spending Slowdown Hits Restaurants
McDonald's disappointing quarterly revenue reflected a broader trend of consumers cutting back on restaurant spending. During the earnings call, CEO Chris Kempchinski described a "divided U.S. economy" where both low-income and middle-income households reduced spending while higher-income consumers maintained their habits. This pattern was consistent across the restaurant industry, with Chipotle, Domino's Pizza, and Starbucks all reporting falling sales. McDonald's shares fell 1.9% on Thursday and ended the week down 1.5%.