Breakfast | Tariff news fluctuates, US stocks rise and fall! Tesla rises over 5% after earnings!

Market Overview

Tariffs once again affect the nerves of the US stock market!

On Wednesday, it was reported that the White House might ease tariff policies, pushing the three major US stock indices to refresh their daily highs in early trading, with the Dow rising nearly 1,190 points, up about 3%, the S&P rising over 3.4%, and the Nasdaq rising nearly 4.5%.

Towards the end of the early session, US Treasury Secretary Becerra mentioned that there is an opportunity for the two major economies to reach a "significant" trade agreement, and the three major US stock indices maintained their upward trend, with the Nasdaq rising over 4%, the S&P rising over 3%, and the Dow rising over 2%.

However, Becerra later stated that Trump has not proposed lowering tariffs for individual economies, and a comprehensive trade agreement between the two sides may take two to three years, with Trump not unilaterally lowering tariffs. The three indices at one point retraced more than half of their gains during the midday session.

The seven major tech giants rose broadly, with Tesla closing up 5.33%, Amazon up 4.25%, Meta Platforms up 4.02%, Nvidia up 3.67%, Google A up 2.5%, Apple up 2.24%, and Microsoft up 1.97%.

The AI robotics and chip sectors led the gains in US stock industries, with Tempus AI closing up 14.62%, and Texas Instruments rising over 6% in after-hours trading; AMD closed up 4.72%, and TSMC ADR rose 4.19%.

The China concept index outperformed the broader market, closing up nearly 3%, with XPeng rising over 7% and Nio up 5%.

US Treasury Secretary Mentions Opportunity for "Significant" Trade Agreement, Also States US Has Not Proposed Lowering Tariffs

Becerra stated that the US needs to achieve economic rebalancing, relying more on manufacturing and exports rather than consumption. If the other party is willing to take action to achieve economic rebalancing from the opposite direction, the two major economies have the opportunity to reach a "significant agreement" on trade issues.

He also stated that he does not hold a position on President Trump's remarks about removing Federal Reserve Chairman Powell, and that Trump has not proposed unilateral tariff reductions for individual major economies, with a comprehensive trade agreement potentially taking two to three years.

Additionally, before trade negotiations can proceed, the US and another major economy need to lower their respective high tariffs, but he also mentioned that Trump will not unilaterally lower tariffs.

Media: White House Confirms Trump Plans to Exempt Some Tariffs for Auto Manufacturers

On Wednesday, the White House confirmed to the media that previously, some media reported that Trump plans to exempt certain tariffs on auto parts, including exemptions for tariffs on steel and aluminum, but not including the 25% tariff on imported vehicles, nor affecting the 25% tariff on auto parts set to take effect on May 3. Analysts believe this is Trump retreating again from his most aggressive tariff policies.

Why Did Trump Suddenly "Let Go" of Powell? Thanks to Becerra and Ross

On Tuesday, Trump publicly stated that he does not intend to fire Powell. Media reports suggest that this partly stems from Treasury Secretary Becerra and Commerce Secretary Ross privately warning Trump that firing Powell could trigger market turmoil and legal disputes. Ross also stated that even if Powell were fired, other Federal Reserve members might maintain a monetary policy similar to Powell's.

First Federal Reserve Beige Book After Tariff Storm: Little Change in Economic Activity, Trade Concerns Spread Across the US

The Beige Book shows that there has been little change in economic activity since the last report, but uncertainty surrounding international trade policy is prevalent across various reports. Only five regions experienced slight growth in economic activity.

In this Beige Book, the term "tariff" was mentioned 107 times, more than double the last report, and words with similar meanings to "uncertainty" were mentioned 89 times. The Beige Book pointed out that as economic uncertainty increases, particularly regarding tariffs, the outlook in several regions has "significantly worsened."

Involving Rare Earths, Musk: "In Negotiation with China"

According to Global Times, Musk stated during the company's earnings call that the mass production plan for Optimus will be affected by China's rare earth export control measures. Tesla is actively applying for export licenses for China's rare earth permanent magnet materials.

"Three Major Headwinds" About to Test NVIDIA

The "three major headwinds" include: AI diffusion rules that will take effect on May 15, AI demand and capital expenditure from U.S. hyperscale customers, and the potential impact of tariffs on profit margins. After accruing $5.5 billion in expenses, Citigroup expects NVIDIA's upcoming first-quarter sales to be only about $500 million above market expectations. More concerning is the outlook for the second quarter, where Citigroup expects sales to remain flat quarter-over-quarter at approximately $44 billion.

Report: OpenAI Expects Revenue to Reach $125 Billion by 2029, AI Agents as Growth Engine

OpenAI predicts that within the next five years, its agent business will account for nearly a quarter of its total revenue, with channel revenue making up one-fifth of total revenue. By 2029, it is expected that the former will generate $29 billion, while the latter will rise to $25 billion. Through cost control, it is anticipated that cash flow will turn positive by 2029, with gross profit margin reaching 70%.

Europe "Tests the Waters," First Fines Apple and Meta €700 Million, Then Gives 60 Days for Observation

The EU fined Apple and Meta €500 million and €200 million, respectively, totaling $798 million, under the Digital Markets Act (DMA). This move came after Trump threatened to impose retaliatory tariffs on the EU. Analysts believe the EU's penalties are relatively restrained, not reaching the maximum fine of 10% of the companies' global annual revenue, aiming to avoid further angering Trump.

Report Says Intel to Announce Over 20% Layoffs This Week

This marks Intel's second round of large-scale layoffs within a year. Last August, the company announced a reduction of approximately 15,000 positions. By the end of 2024, Intel's workforce has decreased from 124,800 the previous year to 108,900. Following the announcement, Intel's stock rose over 5%.

"Europe's Largest Company" SAP Soars After Earnings Report

SAP's first-quarter profit reached €2.3 billion, reversing a loss of €787 million in the same period of 2024. Revenue from cloud business, a key metric for SAP, grew strongly by 26%, reaching €4.99 billion. The company's stock price surged by as much as 11%, marking the largest single-day increase in six years.

U.S. April Markit Composite PMI Unexpectedly Declines to 16-Month Low

Data shows that in April, U.S. business activity growth fell to a 16-month low, and expectations for the business outlook over the next year also dropped to one of the lowest levels since the pandemic; the increase in sales prices for goods and services was the largest in over a year, particularly with a significant rise in manufactured goods prices related to tariffs. The employment index remains sluggish