U.S. Stocks Bounce Back on Hopes of Trade War De-Escalation

Summary

WSJ What's News: U.S. Stocks Bounce Back on Hopes of Trade War De-Escalation
Release Date: April 22, 2025

The latest episode of WSJ What’s News, hosted by The Wall Street Journal, delves into the resurgence of U.S. stocks fueled by optimism over the potential de-escalation of the ongoing trade war. The episode navigates through key market movements, the challenges facing dealmakers under the Trump administration's policies, and the International Monetary Fund's (IMF) cautious economic forecasts. Below is a comprehensive summary of the episode's primary discussions, insights, and conclusions.

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U.S. Stocks Rebound Amid Trade War Optimism

The episode opens with a focus on the robust rebound of U.S. stock markets. Alex Osola reports that major indices saw significant gains, buoyed by positive signals from the White House regarding tariff negotiations.

• Market Performance:

  • Dow Jones Industrial Average surged by over 1,000 points (2.7%).
  • S&P 500 climbed 2.5%.
  • Nasdaq Composite rose 2.7%.
  • Gold prices retreated after initially surging to a record high above $3,500 per ounce.

• Optimism from the White House:

  • Treasury Secretary Scott Besant expressed optimism at an investor summit, stating, “I expect the trade war with China to de-escalate and believe a deal can be reached” (00:59).
  • This positive outlook helped alleviate market fears despite the continued impact of the Trump administration's tariffs.

• Impact on Defense Contractors:

  • Defense sector faced setbacks as companies reported mixed results.
    • RTX anticipates an $850 million reduction in operating profit due to tariffs (00:59).
    • Northrop Grumman downgraded its full-year profit outlook.
    • Lockheed Martin maintained steady guidance despite the broader market fluctuations.

• Tesla’s Struggles:

  • Tesla reported a 71% decline in net income for the first quarter, citing competitive pressures abroad and reputational challenges linked to CEO Elon Musk’s role in the administration.
  • The company’s revenue fell 9%, driven by significant drops in automotive sales across key markets, including the U.S., China, and Germany.

Challenges in Mergers & Acquisitions

The episode transitions to the sluggish state of mergers and acquisitions (M&A) activities, highlighting a 25-month lull in high-value deals.

• Current M&A Climate:

  • February saw no deals over $10 billion globally, with April maintaining a quiet trend.
  • Factors contributing to this slowdown include economic uncertainty from trade wars and threats against Federal Reserve Chair Jerome Powell by President Trump.

• Antitrust Policy Uncertainty:

  • Lauren Thomas, the lead deals reporter, discusses the hesitancy among dealmakers in navigating Trump’s antitrust policies (05:01).
  • She notes, “Dealmakers say uncertainty about approvals will persist even if the market calms down as they struggle to make sense of Trump’s antitrust policy” (05:01).

• Hope for Future Deals:

  • Despite the current stagnation, there is cautious optimism with new leadership in the Federal Trade Commission (FTC) and Department of Justice (DOJ).
  • Lauren Thomas explains, “With new faces both in the FTC and the DOJ, there’s more clarity around just what they’re thinking and how they’re going to look at deals” (03:49).

• Significant Pending Deals:

  • Capital One’s acquisition of Discover for $35 billion received regulatory approval, signaling potential avenues for future transactions.
  • Google’s acquisition of Wiz for $32 billion remains a pivotal case awaiting regulatory clearance, potentially setting a precedent for big tech deals (05:29).

IMF Forecasts Global Economic Slowdown with the U.S. Hit Hard

A significant portion of the episode is dedicated to the IMF's new economic outlook, which forecasts a global slowdown exacerbated by the U.S.'s trade policies.

• IMF’s Revised Projections:

  • Global Economic Growth: Reduced to 2.8% from 3.3%.
  • U.S. Growth: Slashed to 1.8% in 2025 from a previous forecast of 2.7%.
  • Inflation Rate: Expected to be 1 percentage point higher than initially projected.

• Reasons for the Downturn:

  • Tariffs Impact: Increased tariffs make imports costlier, raising production costs for businesses and diminishing their competitiveness.
  • Business Uncertainty: Heightened uncertainty leads businesses to postpone investments and hiring, further slowing economic momentum (08:00).

• IMF’s Stance on Globalization:

  • The IMF attributes the decline in manufacturing jobs not to globalization but to technological advancements and automation.
  • Paul Hannon, Economics Editor, states, “If it isn’t globalization that’s causing this problem, then tariffs really aren’t something that are going to fix it” (08:51).
  • The IMF emphasizes the role of artificial intelligence in shaping future economic landscapes.

• Long-Term Outlook:

  • The IMF suggests that if the current trends continue, we are witnessing the beginning of a prolonged era of slower economic growth, marking a departure from nearly eight decades of diminishing barriers to global trade (09:30).

Adaptations in Consumer and Business Practices

The episode also touches upon how individuals and businesses are adjusting to the evolving economic climate.

• Small Business Dynamics:

  • Verizon highlights the multifaceted roles small business owners must juggle, offering support services to alleviate these pressures (06:19).

• Personal Finance Adjustments:

  • Ann Marie Alcantara reports on how young women are proactively "recession-proofing" their lives by making incremental lifestyle changes to enhance savings (10:04).
    • Examples include reducing dining out, cutting discretionary spending on beauty treatments, and opting for more cost-effective transportation methods.

• Data Privacy Concerns:

  • Nicole Nguyen, Personal Tech Columnist, discusses the pervasive nature of personal data online, revealing how even after deletion requests, personal information can remain accessible (11:10).
    • She emphasizes the vulnerability of personal data, including home addresses and birth dates, which are aggregated by data brokers from various sources (11:42).

Conclusion

The episode of WSJ What’s News presents a multifaceted view of the current economic landscape, highlighting the interplay between optimistic market rebounds and underlying challenges posed by trade policies and global economic shifts. While U.S. stocks show resilience buoyed by hopes of tariff negotiations easing, significant hurdles remain in the realms of mergers and acquisitions, and broader economic growth as forecasted by the IMF. Concurrently, both businesses and consumers are adapting strategically to navigate the uncertain terrain shaped by these developments.

For listeners seeking deeper insights into personal finance strategies and data privacy, additional segments featuring Ann Marie Alcantara and Nicole Nguyen provide practical guidance and revelations.

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Notable Quotes:

• Alex Osola (00:59): “US Shares rebounded today, with big tech stocks regaining some of the ground they lost yesterday.”
• Paul Hannon (08:00): “There are two things going on... the tariffs themselves... and a general feeling of uncertainty about where exactly the US is going this year.”
• Lauren Thomas (03:49): “With new faces both in the FTC and the DOJ, there’s more clarity around just what they’re thinking and how they’re going to look at deals.”

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Produced by: Pierre Bienname and Anthony Banci
Supervising Producer: Michael Kosmides
Host: Alex Osola

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For more detailed discussions and expert insights, consider tuning into future episodes of WSJ What’s News.

Transcript

[Alex Osola]

The spirit of innovation is deeply ingrained.

[Ann Marie Alcantara]

In America, and Google is helping Americans innovate in ways both big and small. Central Texas Regional Mobility Authority is using Google AI to create smarter tolling systems.

[Alex Osola]

And improve traffic flow for Texans. This is a new era of American innovation. Find out more at G Co AmericanInnovation US stocks bounce back, lifted by optimism from the White House on tariff negotiations. Plus, dealmakers struggle to make sense of Trump's antitrust policy. And the International Monetary Fund anticipates that global economic growth will slow with the US Hit particularly hard.

[Paul Hannon]

Their problem is to do with protecting businesses in such a way that everybody gets a little bit kind of lazy and complacent. And that dynamism that the US Economy in particular is renowned for ebbs away, maybe slowly, maybe very quickly.

[Alex Osola]

It's Tuesday, April 22nd. Alex I'm Alex Osila 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. US Shares rebounded today, with big tech stocks regaining some of the ground they lost yesterday. Traders were cheered by optimism from the White House on tariff negotiations, according to people familiar with the matter. Treasury Secretary Scott Besant said at an investor summit that he expects the trade war with China to de escalate and believes a deal can be reached. The bounce back came despite fresh fallout from the Trump administration's tariffs. Defense contractors were among the biggest losers in the S&P 500 today after several of the industry's biggest names reported results. Aerospace and defense specialist RTX said it expects to take an $850 million hit to operating profit from tariffs. This without factoring in the higher reciprocal tariffs that the Trump administration has put on pause. Northrop Grumman slashed its full year profit outlook while Lockheed Martin kept guidance steady. The Dow rose more than 1,000 points, or 2.7%. The S&P 500 was up 2.5% and the Nasdaq closed 2.7% higher. Gold retreated after surging earlier today to a new record high above $3,500. A. Troy OUN and reporting after markets closed. Tesla saw its net income slide 71% in the first quarter as the company struggled to overcome competitive pressure overseas and a reputational hit from CEO Elon Musk's polarizing role in the Trump administration. Tesla revenue fell also in the first quarter following a steep decline in automotive sales, including double digit percentage drops in key markets including the U.S. china and Germany. Tesla reported about $19 billion in revenue for the quarter, down 9% compared to the same period last year. It's been a slow period for mergers and acquisitions. According to data from the London Stock Exchange Group, or LSEG, February marked the first time in 25 months that no deal valued over $10 billion was announced globally. And April's been quiet, too. Some of that reticence is due to economic uncertainty from President Trump's tariff war and his threats to fire Federal Reserve Chair Jerome Powell. But dealmakers say uncertainty about approvals will persist even if the market calms down as they struggle to make sense of Trump's antitrust policy. Lead deals reporter Lauren Thomas joins me now. Lauren, what are some signs that are giving dealmakers some hope here?

[Lauren Thomas]

When the Biden administration turned over, you had one individual in particular. Lina Khan was kind of notoriously against, you know, monopolies and really the idea of M and A in general. And so with her moving on, there was this celebration across Wall street and in particular down in D.C. an expectation that concerns around antitrust were going to lighten up and that there would be a wave of M and A under Trump. And of course, this hasn't materialized. What's giving people hope, though, is now we have these new faces both in the FTC and the doj. And the ftc. You have Andrew Ferguson, the chair of that organization, and then in the doj, the head of the antitrust division, Gail Slater. As lawyers and bankers and companies are getting to know these individuals better, there's more clarity around just what they're thinking and how they're going to look at deals. It's kind of like time heals all wounds. So we haven't had many deals yet to really be a test case. There's still some question marks. Generally, yes, you'd see a lull at the start of a new administration, but once you get a couple months into it, everyone's more comfortable with like Ferguson and Slater, for example.

[Alex Osola]

You know, there haven't been as many big deals this year, as you mentioned, but there have been a few. One of the big ones was Capital One acquiring Discover for $35 billion. That got the go ahead from regulators. But there's one deal that's expected to provide a bit of a litmus test with regulators. Right. And that's Google's acquisition of Wiz for 32 billion dol billion. So that happened in March and it's still awaiting clearance from regulators. What are dealmakers looking to learn here?

[Lauren Thomas]

What's so interesting, of course, about that deal is just in and of itself, it's a tech deal and big tech, Ferguson himself and Slater, too. Like, everyone's always looking at big tech and they are more under the spotlight than other industries. And so that will certainly test just the appetite in general for a big tech deal. Alphabet is already facing its own challenges elsewhere and then it goes and does a deal. What's interesting about that deal, of course, the company to frame it as this is not us like buying another business where we're gonna just take more market share. And so it tried to frame the deal as something that's good for national security just in general here in the US So it'll be interesting to see that one. But yeah, we just, we haven't had as many big deals to really put some of these new folks like Ferguson and Slater to the test.

[Alex Osola]

That was lead deals reporter Lauren Thomas. Thanks so much, Lauren.

[Lauren Thomas]

Thank you.

[Alex Osola]

Coming up, the IMF forecasts a global economic slowdown, with the US Impacted significantly in the wake of Trump's tariffs. That's after the break. You're the owner of a small business, which means you're also the tech guy.

[Lauren Thomas]

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[Paul Hannon]

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[Lauren Thomas]

Get a FREE tech check, special deals and more.

[Alex Osola]

Call 1-800-483-4428 or visit verizon.comsmallbusiness to book your appointment. Verizon Business the sharp rise in tariffs since the start of the year marks the onset of a new era that will see most economies grow more slowly than previously expected. In its quarterly outlook on the world economy out today, the International Monetary Fund projected the global economy to grow 2.8% this year, down from 3.3%. According to the IMF, the US is forecast to suffer one of the largest hits to its prospects, with growth in 2025 now expected to be 1.8%, down from a January forecast of 2.7%, and with the inflation rate expected to be 1 percentage point higher than anticipated this year. These forecasts are based on tariffs announced through April 2, before the 90 day pause that President Trump announced. For more, I'm joined by economics editor Paul Hannon. Paul, why is the IMF expecting the US to be hit particularly hard?

[Paul Hannon]

Well, there are two things going on. One is the tariffs themselves. They make imports more expensive. So for a lot of businesses, it's just going to become more costly to produce the stuff that they produce and then it will become more difficult for them to find buyers and then there's a kind of more general feeling of uncertainty about where exactly the US Is going this year. And when businesses see a lot of uncertainty, what they tend to do is sort of freeze or pause decisions to invest or hire people. This, you know, sense of not really knowing how things are going to roll out in the next sort of nine months or so.

[Alex Osola]

The Trump administration has said that higher tariffs will ultimately benefit the US Economy since they'll help bring back manufacturing. Does the IMF see globalization as an issue?

[Paul Hannon]

They acknowledge that a lot of people feel pretty bad about the loss of factory jobs, but they argue that this is more to do with technological change, automation, the introduction of robots. And so the IMF's argument is that if it isn't globalization that's causing this problem, then tariffs really aren't something that are going to fix it, that this is just a consequence of economies growing more sophisticated over time. And you have to bear in mind that we've got artificial intelligence to deal with in the coming decade.

[Alex Osola]

What is the IMF's longer term outlook beyond this year?

[Paul Hannon]

That really depends on whether they're right about this being the start of a new era. That's one of the claims they made today, that we're seeing the end of something that lasted for eight decades. Barriers to moving things across borders were getting lower and lower and it was easier and easier. If it turns out that we're now heading in the other direction and we've either just reached that level very quickly or there's more to come, then their outlook is not great.

[Alex Osola]

That was economics editor Paul Hannon. Thank you, Paul.

[Paul Hannon]

Thanks very much.

[Alex Osola]

Someone else who's keeping a careful eye on the economic future. Young women, they're already starting to recession proof their lives, making small changes to their lifestyles to bulk up their savings. Ann Marie Alcantara, who covers Internet culture for the Wall Street Journal, told our your Money Briefing podcast about what American women are doing to save a little green.

[Ann Marie Alcantara]

One big theme across almost every single person I spoke to included not eating out as much anymore or even when you're grocery shopp and cutting back on little treats like a pint of ice cream and things like that. Just anything where they can cut back in a way that feels okay. You know, it's not a big sacrifice, but definitely helps their wallet, manicures. I spoke to one woman who thought about going back to being a brunette after being a blonde because it's really expensive to get highlights. Some are cutting out, you know, those subscriptions like Amazon Prime, Netflix, another woman mentioned she's not doing sober Ubers anymore, so anytime she can take the subway, she's doing that versus spending money on Uber. So it's all sorts of these, quote unquote, like little luxuries that we have in our lives that people are cutting back on.

[Alex Osola]

For more from Annemarie, listen to tomorrow's episode of youf Money Briefing. When it comes to personal information, humans may forget, but the Internet remembers. If you don't believe me, check out Google's updated results about yout tool. WSJ Personal tech columnist Nicole Nguyen used it, and as she told our Tech News Briefing podcast, she was surprised to find a trove of her personal information on the Internet, even when she'd already asked for it to be deleted.

[Nicole Nguyen]

You feel a little uneasy. A home address is something that we think of as private because it's where our physical presence is. But in fact, it's data that appears in hundreds, if not thousands of databases. Because every time we shop online, we input our address. It's a part of public records. If you own a home, if you have applied for a driver's license or subscribed to a magazine, this information is out there. And these websites, people, search sites or data brokers can purchase this information from a variety of sources or request it from the government. And they collate it in this dossier that includes other information, including your birth date. Maybe one site included my grandma's name that I found from the Google Results about you tool. There's a lot of our data out there.

[Alex Osola]

To hear more from Nicole and what you can do to remove that information about you, listen to today's episode of Tech News Briefing. And that's what's news for this Tuesday afternoon. Today's show is produced by Pierre Bienname and 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.