WSJ What’s News: Episode Summary - May 3, 2025

Host: Francesca Fontana
Podcast: WSJ What’s News
Episode: What’s News in Markets: Nvidia’s China Rival, Tariff Tech Effect, McDonald’s Slips
Release Date: May 3, 2025

1. Introduction

Francesca Fontana opens the episode by highlighting the two major stories dominating the market this week: trade developments and quarterly earnings reports. These elements are deeply intertwined, with investors keenly observing the real-world impacts of Trump’s tariffs on corporations and consumer spending.

“Trade and earnings were the two big stories of the market this week. And in many ways, they were intertwined as investors have been watching for the effects of Trump's tariffs on corporations, on consumer spending, on the real world.” – Francesca Fontana [00:20]

2. Trade Developments: Optimism Amid Uncertainty

Several trade-related developments injected optimism into the stock markets:

• Commerce Secretary Howard Lutnick announced reaching a trade deal with an unnamed country, though specifics remain undisclosed.

• Trump’s Softened Stance on Auto Tariffs: Indicates a potential easing of previous restrictions, alleviating some investor concerns.

• Easing Tensions Between Washington and Beijing: Signs suggest a thawing relationship, particularly concerning trade and tariffs.

These factors collectively contributed to significant market gains:

• Dow Jones: +3%
• S&P 500: +2.9%
• Nasdaq: +3.4%

3. Nvidia vs. Huawei: The US-China Chip Battle

A focal point of the episode is the intensifying rivalry between Nvidia, a leading AI chip manufacturer, and China’s Huawei Technologies.

• Huawei’s Advancements: According to a Wall Street Journal report, Huawei is preparing to test its newest and most powerful AI processor, aiming to compete directly with Nvidia’s offerings.

• US Restrictions: Despite being on the US trade blacklist for nearly six years and facing restrictions on Western chipmaking equipment, Huawei has emerged as a formidable player in China’s AI sector.

“Huawei has emerged as China's champion in the AI field.” – Francesca Fontana [05:45]

Market Impact:

• Nvidia’s Stock: Fell by 2.1% on Monday following the report but rebounded to gain 3.1% over the week, reflecting investor resilience and optimism about Nvidia’s long-term prospects.

4. Earnings of the “Magnificent Seven” Superstocks

The week saw earnings reports from several tech giants, collectively known as the "Magnificent Seven," which played a significant role in market movements.

• Microsoft and Meta Platforms:

  • Microsoft: Reported better-than-expected results, indicating that major corporate clients are maintaining their technology budgets.

    “Microsoft indicated that big corporate clients aren't slashing their technology budgets, at least not yet.” – Francesca Fontana [12:30]

  • Meta Platforms (Facebook): Also surpassed earnings expectations, reassuring investors about steady growth despite tariff concerns.

• Stock Performance:

  • Meta: Shares rose 4.2% on Thursday and gained approximately 9% over the week.
  • Microsoft: Shares jumped 7.6% on Thursday and saw an 11% weekly increase.

• Apple and Amazon:

  • Apple: While sales increased, the company warned that current tariff plans would add $900 million to its costs for the quarter.

    “Apple's sales rose, but it said current tariff plans would add 900 million to its cost this quarter.” – Francesca Fontana [17:15]

  • Amazon: Predicted a solid quarter, but its lower-end forecasts fell short of analysts’ expectations.

• Stock Performance:

  • Apple: Shares fell more than 3.5% on Friday and nearly 2% weekly.
  • Amazon: Shares ended roughly flat on Friday with a minor weekly increase of 0.5%.

5. McDonald’s Revenue Decline and Shifting Consumer Spending

The episode shifts focus to the fast-food giant McDonald's, which reported a larger-than-expected drop in quarterly revenue. This decline is part of a broader trend of slowing consumer spending affecting various restaurant chains such as Chipotle Mexican Grill, Domino's Pizza, and Starbucks.

• Earnings Call Insights:

  • CEO Chris Kamchinski: Highlighted that both low and middle-income consumers have reduced their spending, while higher-income groups continue to spend, illustrating a divided U.S. economy.

    “Low income consumers pulled back on their spending, but so did middle income households while the higher income crowd kept spending...” – Chris Kamchinski [22:10]

• Stock Performance:

  • McDonald's: Shares fell 1.9% on Thursday and experienced a weekly loss of 1.5%.

6. Conclusion

Francesca Fontana wraps up the episode by summarizing the key market movements driven by trade developments and earnings reports. She directs listeners to her column in the Wall Street Journal's Exchange section for more in-depth analysis of stock movements based on the week's news.

“And now you know what's news in markets this week. You can read about more stocks that moved on the week's news in the Score, my column in the Wall Street Journal's Exchange section.” – Francesca Fontana [25:00]

Production Credits:
Produced by Zoe Kolkin and Anthony Banzi with supervising producer Talia Arbell.

“Today's show was produced by Zoe Kolkin and Anthony Banzi with supervising producer Talia Arbell.” – Francesca Fontana [25:30]

Takeaway: This week’s market dynamics were heavily influenced by significant trade developments and the earnings performance of major tech companies. While trade optimism and strong performances from giants like Microsoft and Meta boosted the markets, challenges such as Nvidia’s competitive pressures from Huawei and McDonald's revenue decline highlighted ongoing economic divisions and shifting consumer behaviors.