- US stocks jumped on Thursday after Donald Trump did two things to give the market a boost.
- The president said a trade deal with the UK was coming, the first deal since tariffs came into effect.
- The Commerce Department also confirmed that Trump will end Biden’s AI chip export restrictions.
US stocks rose on Thursday, driven higher by optimism around trade deals and an end to chip rules that had been a headwind for high-flying AI names.
President Donald Trump on Thursday said he would be announcing a “comprehensive” trade deal between the US and the UK. At the same time, the Commerce Department confirmed reports that the administration would end a Biden-era export curb for AI chips.
“The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation. We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance,” the department said in a statement.
Major indexes rose in the early morning, with the Dow rising as much as 300 points before paring its gains. Chip and mega-cap tech stocks were also up, with shares of Intel, Broadcom, and Nvidia among the biggest gainers.
Here’s where major indexes stood shortly after the 9:30 a.m. ET opening bell:
- S&P 500: 5,658.71, up 0.5%
- Dow Jones Industrial Average: 41,277.04, up 0.4% (+163.07 points)
- Nasdaq composite: 17,844.36, up 0.6%
A 'comprehensive' UK trade deal
Trump announced that the US and the UK had reached a trade agreement in a post on Truth Social. It comes more than a month after Trump's Liberation Day tariffs first swung into effect on April 2.
Still, markets are relieved to see progress on trade negotiations, with concerns rising in recent weeks that Trump's tariffs could significantly weigh on growth while stoking inflation.
"The agreement with the United Kingdom is a full and comprehensive one that will cement the relationship between the United States and the United Kingdom for many years to come," Trump wrote on his social media platform Thursday morning. "Many other deals, which are in serious stages of negotiation, to follow!"
All eyes are still on trade talks with China, one of the US's largest trading partners. US officials are set to meet with Chinese counterparts this weekend.
Good news for chipmakers
Chip stocks continued to climb higher after the Commerce Department confirmed on Wednesday that Trump was readying to kill Biden's "AI diffusion rule," a set of policies that would restrict the exports of AI chips made in the US to other countries.
Big moves shortly after the opening bell include:
- Advanced Micro Devices: +3.96%
- Intel: +2.51%
- Nvidia: +0.48%
- Broadcom: +0.58%
The rules, which would impact firms like Nvidia and Intel, were set to go into effect on May 15. Nvidia and other chipmakers had publicly opposed the rule in the past.
"We welcome the Administration's leadership and new direction on AI policy. With the AI Diffusion Rule revoked, America will have a once-in-a-generation opportunity to lead the next industrial revolution and create high-paying US jobs, build new U.S.-supplied infrastructure, and alleviate the trade deficit," A Nvidia spokesperson told BI.
Bond yields also edged higher as traders digested the Fed's latest policy decision, which appeared to defy Trump's repeated calls for the Fed to take interest rates in the economy lower. The central bank opted to keep rates steady on Wednesday, and highlighted the risks of stagflation in the US economy.
Stagflation, often considered a worst-case economic scenario that's even harder for policymakers to resolve than a typical recession, involves inflation remaining stubbornly high while growth slows.
"What looks likely, given the scope and scale of the tariffs, is that we will see, certainly the risks to higher inflation and unemployment have increased," Powell said in a press conference yesterday. "And if that's what we do see and if the tariffs are ultimately put in place at those levels, which we don't know, then we won't see further progress toward our goals."
The 10-year US Treasury yield, a reflection of long-term interest rates in the economy, has spiked since Trump's tariffs were implemented on April 2.
"Too Late" Jerome Powell is a FOOL, who doesn't have a clue. Other than that, I like him very much! Oil and Energy way down, almost all costs (groceries and 'eggs') down, virtually NO INFLATION," Trump posted on Truth Social on Thursday.