Nasdaq Enters Bull Market After U.S.-China Temporarily Slash Tariffs

Summary

Podcast Summary: WSJ What’s News – "Nasdaq Enters Bull Market After U.S.-China Temporarily Slash Tariffs" Release Date: May 12, 2025

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Introduction

On the May 12, 2025 episode of WSJ What’s News, host Alex Osola delves into significant developments impacting global markets and the U.S. economy. The episode covers the Nasdaq's entry into a new bull market following a temporary reduction in U.S.-China tariffs, President Trump's executive order on prescription drug prices, the House Republicans' unveiled tax plan, the cooling retail property market, the release of an American hostage by Hamas, and Fox Corp.'s launch of a new streaming service.

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U.S.-China Trade Relations and Market Reactions

Timestamp: [00:03] - [03:21]

The episode opens with the Nasdaq entering a new bull market, fueled by a significant improvement in U.S.-China trade relations. Treasury Secretary Scott Besant announced that the U.S. collected over $16 billion in customs duties in April, marking a $7.6 billion increase from the previous month. This surge in revenue is attributed to accelerated tariff collections amid relaxed trade tensions.

Key Highlights:

• Temporary Tariff Slashes: The U.S. agreed to reduce tariffs on Chinese goods from 145% to 30%, while China reduced its tariffs on U.S. goods from 125% to 10%. A 20% tariff related to the fentanyl crisis remains unchanged.
• Market Impact: Major U.S. stock indexes closed higher, with the Nasdaq climbing 4.3%, the S&P 500 up by 3.25%, and the Dow Jones Industrial Average increasing by 2.8%.
• Economic Outlook: While the temporary agreement is positive for markets, economists warn of a potential widening U.S. trade deficit with China as businesses may increase inventory purchases to benefit from lower tariffs.

Notable Quote: Johnson Dreyu, WSJ Columnist, expressed caution regarding the trade truce's impact on businesses:

“It's very unclear what this means because it was unclear what the previous announcements meant.” ([03:21])

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President Trump's Executive Order on Prescription Drug Prices

Timestamp: [03:21] - [07:43]

President Trump signed an executive order aimed at lowering prescription drug prices in the U.S., marking a significant policy shift intended to align U.S. drug pricing with that of other developed nations.

Key Highlights:

• Objective: The order seeks to reduce drug prices by leveraging international pricing benchmarks and compelling pharmaceutical companies to lower their U.S. prices.
• Implementation: The initiative relies on the Department of Health and Human Services (HHS) to engage with drug companies over the next 30 days to negotiate price reductions. The Commerce Department is also tasked with investigating unfair trade practices that may contribute to high drug costs.
• Industry Response: The pharmaceutical industry has reacted negatively, arguing that government price setting could harm consumers by limiting choices and stifling innovation. They emphasize the importance of research and development funding, which they contend is jeopardized by price controls.

Notable Quotes:

• President Donald Trump:

  “This means American patients were effectively subsidizing socialist healthcare systems.” ([04:37])

• Natalie Andrews, WSJ White House Correspondent:

  “Consumers are not going to see anything right away, but it is putting a process into play behind the scenes...” ([06:27])

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House Republicans Unveil Tax Plan

Timestamp: [07:47] - [09:08]

House Republicans presented a comprehensive tax plan targeting various sectors and extending certain tax cuts.

Key Highlights:

• Tax Adjustments: The plan proposes raising the state and local tax deduction limits, increasing taxes on tipped income and overtime pay, and partially extending President Trump's 2017 tax cuts.
• Funding the Plan: The tax cuts are to be partially funded by rolling back tax breaks for clean energy, university and foundation endowments, remittances to foreign countries, and tax credits for electric vehicles and renewable energy projects.
• Legislative Outlook: The House Ways and Means Committee is scheduled to review the plan, which is expected to be incorporated into a larger legislative package.

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Retail Property Market Slowdown

Timestamp: [09:08] - [10:38]

After a robust post-pandemic rebound, the retail property market is showing signs of weakness, with increased vacancies and store closures.

Key Highlights:

• Declining Leasing Activity: According to Cushman and Wakefield, retailers vacated nearly 6 million more square feet than they occupied in the first quarter, marking the weakest leasing quarter since the pandemic began.
• Store Closures: Significant retailers, including Big Lots, Party City, and Joann, have closed numerous stores. Major pharmacy chains like CVS Health and Walgreens are also downsizing.
• Market Stability: Despite the slowdown, the retail sector remains relatively strong due to minimal new retail development. This limited expansion helps keep vacancies near historical lows, ensuring some stability amid economic uncertainties.

Notable Quote: Kate King, WSJ Real Estate Reporter:

“Overall the retail sector is pretty well positioned to handle the economic turmoil that many people feel is advancing.” ([09:45])

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Release of American Hostage by Hamas

Timestamp: [10:42] - [11:28]

Hamas released the last remaining living American hostage in Gaza, marking a major diplomatic achievement for the Trump administration, though it elicited mixed reactions in Israel.

Key Highlights:

• Hostage Details: Idan Alexander, a 21-year-old American-Israeli soldier, was released after being held since October 7, 2023. Despite his release, Hamas still retains the bodies of four other American-Israeli casualties from the same period.
• Diplomatic Efforts: The release was part of a deal brokered between the U.S. and Hamas, with President Trump announcing the agreement shortly before Alexander's return.

Notable Quote: President Donald Trump:

“The only American citizen is captured and held hostage by Hamas since October 7, 2023 and he's coming home to his parents, which is really great news.” ([11:09])

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Fox Corp. Launches New Streaming Service

Timestamp: [11:28] - End

Fox Corp. announced the launch of its direct-to-consumer streaming service, Fox One, which will integrate Fox News, Fox Sports, and additional entertainment content. The service is slated to launch before the NFL season begins in September.

Key Highlights:

• Service Details: While pricing details remain undisclosed, CEO Lachlan Murdoch indicated that Fox One will complement existing agreements with cable and satellite TV distributors rather than compete with them.
• Strategic Move: The launch represents a strategic expansion of Fox’s digital offerings, aiming to capture a broader audience in the competitive streaming market.

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Conclusion

The May 12, 2025 episode of WSJ What’s News provided a comprehensive overview of pivotal economic and political developments. From the Nasdaq's bullish momentum driven by eased U.S.-China trade tensions to significant policy shifts in drug pricing and taxation, the episode highlighted both opportunities and challenges facing the U.S. economy. Additionally, updates on the retail property market, international diplomacy, and media industry innovations underscored the multifaceted nature of today’s global news landscape.

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Produced by Anthony Banci with supervising producer Michael Kosmides. For more insights, listeners are encouraged to tune in to future episodes.

Transcript

[Alex Osola]

The Nasdaq enters a new bull market and US Stocks soar after a major thaw in US China trade relations. Plus, President Trump signs an executive order aimed at lowering drug prices.

[Natalie Andrews]

Consumers are not going to see anything right away, but it is putting a process into play behind the scenes of telling the US Trade representative and the Commerce Department to look at any unreasonable and discriminatory practices in foreign countries.

[Alex Osola]

Why the retail property market isn't looking great for the rest of 2025 it's Monday, May 12th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. The treasury said the US collected over $16 billion in customs duties in April. That's $7.6 billion more than in the previous month as revenue from tariffs accelerated sharply. US Stocks rallied after the US And China announced that they have agreed to temporarily slash tariffs on each other's goods. Shares of companies that had been punished by the trade war, such as Amazon, Apple and Tesla, advanced the dollar jumped, bond yields rose and investors scaled back bets on Federal Reserve rate cuts. In the end, major U.S. indexes closed higher. The tech heavy NASDAQ climbed 4.3%. It entered a new bull market by closing more than 20% above its April low. The S&P 500 rose 3.25% and the Dow ended the day 2.8% higher. So what did the US and China agree to that made investors happy? As we mentioned in our morning show, the US will lower tariffs of 145% on Chinese goods to 30%. Within that framework, Washington will cut its 125% reciprocal tariff on Chinese goods to 10%. A 20% tariff tied to the fentanyl crisis will remain. China will cut its retaliatory levy on U.S. goods to 10% from 125%. Treasury Secretary Scott Besant said today that the agreement doesn't include any sector specific tariffs that have been put across all trading partners. He also said there were no discussions on currencies. The truce, which is a bigger u turn than many market watchers were expecting, lasts 90 days, but it could take longer than that for the countries to reach a full trade agreement. Some economists anticipate that the US Trade deficit with China could widen as businesses restock inventories to take advantage of the lower tariff rates. That temporary agreement may be good news for markets, but not everyone is optimistic. With so much instability around tariffs and trade, analysts offering their expectations are now flying pretty much blind. They're taking their cues from the same corporate executives who are now issuing meaningless forecasts as a number of companies have scrapped their guidance for 2025 or have offered one scenario for a stable environment and another for a recession. WSJ Heard on the street columnist Johnson Dreyu told our your Money Briefing podcast what the temporary trade war truce between the US And China means for companies.

[Johnson Dreyu]

It's hard to know because the guidance that we're getting from companies is very conditional and very uncertain. So, for example, BMW said the other day when they reported their quarterly earnings that they actually expect a big chunk of the tariffs that got announced on the famous Liberation Day to be rolled back by July or mitigated through some types of offsetting policies. Of course, nobody knows that, and many equity analysts immediately pointed that out that BMW was being pretty optimistic. Here we saw Volkswagen. They announced guidance for 2025 that assumed that there were no extra tariffs, which is probably wrong, too. If you assume that all of what's been announced will stay, you're probably wrong. If you assume that none of it is going to stay, you're probably wrong, too. The bottom line being it's very unclear what this means because it was unclear what the previous announcements meant.

[Alex Osola]

And you can listen to John's interview on youn Money Briefing later this week. President Trump has signed an executive order aimed at lowering the cost of prescription drugs. Speaking from the Roosevelt Room of the White House this morning, Trump said the order is intended to tie US Drug prices to what other countries pay.

[Donald Trump]

For years, pharmaceutical and drug companies have said that research and development costs were what they are and for no reason whatsoever, they had to be borne by America alone. Not anymore, they don't. This means American patients were effectively subsidizing socialist healthcare systems. In Germany, in all parts of the European Union, they were the toughest of all. They were nasty. And I see that. I see that with trade, too. European Union is in many ways nastier than China.

[Alex Osola]

For more on the executive order, I'm joined by WSJ White House correspondent Natalie Andrews. So, Natalie, what are the details of this plan? What do we know about it?

[Natalie Andrews]

We know the goal is to lower the price of prescription drugs. Consumers in the United States pay a lot more in many cases for prescription drugs elsewhere. In developed nations. You have a lot of countries with universal health care systems, and that has allowed them to negotiate and block with drug companies. The United States doesn't have that. And so we see consumers paying all across the board on drug prices. So this is a campaign promise from Donald Trump but it's an executive order. And one thing, they're not legislation, they're not mandates from Congress, and they're not a law. So it first relies on drug companies to lower the prices themselves and then has some teeth in telling HHS to go after the drug companies or Commerce. And Commerce Department has some levies and levers they can pull there. But it will be difficult for the president to do what he says, which he says this is equalizing drug prices across the world.

[Alex Osola]

So what does this change or put into place here?

[Natalie Andrews]

Consumers are not going to see anything right away, but it is putting a process into play behind the scenes of telling the US Trade representative and the Commerce Department to look at any unreasonable and discriminatory practices in foreign countries. It also is telling HHS Secretary Robert F. Kennedy to take the next 30 days to work with pharmaceutical companies on lowering prices. That could include talking to the pharmaceutical companies and saying, hey, we've done an analysis and you're charging as X and everywhere else you're charging these countries Y. We need you to bring that in. If you don't, we're going to use powers that we have through the fda, powers that we have as the country's health agency to make your life more difficult.

[Alex Osola]

What does the pharma industry say about this?

[Natalie Andrews]

It is not happy the pharma industry about this. They're saying it's going to hurt consumers, that government price setting is bad for American patients, that it could limit choices. The pharma industry, as Kennedy noted in the Roosevelt Room at the White House today, they are a strong lobbying organization that has a lot of money behind it that does focus in research and development. And one reason why they have a lot of lobbyists is to get that research and development money to get those government grants. They're also a powerful force in Washington.

[Alex Osola]

That was White House correspondent Natalie Andrews. Thank you, Natalie.

[Natalie Andrews]

Thank you.

[Alex Osola]

House Republicans have unveiled a tax plan that raises the state and local tax deduction and some taxes on tipped income and overtime pay, and extends President Trump's expiring 2017 tax cuts partially paid for with a rollback of clean energy tax breaks high on their list of targets, university and foundation endowments, remittances to foreign countries and tax credits for electric vehicles and renewable energy projects. The House Ways and Means Committee will meet tomorrow to consider the plan, which is expected to advance easily and get folded into Trump's one big, beautiful bill coming up, why the post pandemic retail property surge seems to be sputtering. That's after the break for the past few years, the retail property market has been on a post Covid rebound. Now that rebound is starting to fizzle. According to real estate firm Cushman and Wakefield, retailers vacated nearly 6 million more square feet than they occupied during the first three months of the year. That marked the weakest quarter for shopping center leasing since the onset of the pandemic in 2020. Real Estate Reporter Kate King joins me now with more. Kate, the big question I have here about all of this is why? What is happening?

[Kate King]

The biggest reason that retail leasing is slowing down is that retailers are closing more stores than they're opening. After two years of the opposite of retailers opening more stores than they were closing, we're now starting to see some large retailer bankruptcies and closures which are leaving holes in shopping centers. Some examples are Big Lots, Party City, and more recently the craft supply store joann. And then we also have these kind of large closures, particularly in the pharmacy sector, CVS Health and Walgreens.

[Alex Osola]

What does this say about the retail sector overall?

[Kate King]

Certainly people who own shopping malls and shopping centers don't want to see closures at their properties because then they have to spend money and time finding replacement tenants. The good news is that the retail sector is in the strongest position that it's been in a while and that's due to a couple of factors. The biggest factor is that very few people are building new retail, so there's less competition from new properties and there's fewer options for retailers who do want to open more stores. So they're going to be driven to the existing shopping centers. This is going to keep vacancy a little bit in check. We did see retail vacancy tick up a bit, but it's still really close to the historic low levels. So overall, overall the retail sector is pretty well positioned to handle the economic turmoil that many people feel is advancing.

[Alex Osola]

That was WSJ real estate reporter Kate King. Thank you, Kate.

[Kate King]

Thanks, Alex.

[Alex Osola]

In other news, Hamas has released the last remaining living American hostage in Gaza, marking a diplomatic win for the Trump administration that has brought mixed reactions in Israel. Idan Alexander, a 21 year old American Israeli soldier who was captured while serving near the border with Gaza was released as part of a deal between the US And Hamas. President Trump announced the agreement a few hours before Alexander's release.

[Donald Trump]

The only American citizen is captured and held hostage by Hamas since October 7, 2023 and he's coming home to his parents, which is really great news. I mean, to me it's big news. They thought he was dead.

[Alex Osola]

Hamas still holds the bodies of four slain American Israelis taken during its assault on Southern Israel on October 7, 2023. The US is also working on their release. And Fox Corp. Said it would launch its direct to consumer streaming service that will include Fox News, Fox Sports and other entertainment offerings before the start of the NFL season in September. On an investor call this morning, Fox CEO Lachlan Murdoch said the new platform will be called Fox One. Murdoch didn't disclose pricing details for the new product, but said it won't undercut deals Fox has with cable and satellite television distributors. Fox and the Wall Street Journal's parent company, News Corp. Share common ownership, and that's what's news for this Monday afternoon. Today's show was produced by Anthony Banci with supervising producer Michael Kosmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.