Stocks, Bonds, Dollar Waver Amid US-China Talks: Markets Wrap

This content was published on June 9, 2025 - 15:56

5 minutes

(Bloomberg) — Stocks, bonds and the dollar saw small moves as investors monitored trade talks between the US and China for signs on whether tensions between the world’s two largest economies are cooling.

Following a rally that put the S&P 500 just about 2% away from its record, the American equity benchmark was little changed on Monday. Treasuries traded off their session highs, with 30-year bonds underperforming just days ahead of a $22 billion US sale that will offer a fresh test of demand for the beleaguered securities. The greenback trailed most major currencies.

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Trade talks between Washington and Beijing kicked off in London, with the US signaling a willingness to remove restrictions on some tech exports in exchange for assurances that China is easing limits on rare earth shipments. The meeting, which began Monday just after 1 p.m. local time, is expected to extend into the UK evening and may restart Tuesday if necessary.

“Markets have moved higher on tariff postponement and the perception that they will be more moderate than initially announced,” said Richard Saperstein at Treasury Partners. “We expect markets to remain headline sensitive, as trade deals take time to negotiate and unsettling tariff news is likely to cause noticeable volatility.”

Read: Nothing to Fear? US Stocks’ Risk Premiums Sit at Multidecade Low

Wall Street strategists are growing optimistic about US stocks, with forecasters at Morgan Stanley and Goldman Sachs Group Inc. the latest to suggest resilient economic growth would limit any pullback over the summer.

Morgan Stanley’s Michael Wilson said a sharp improvement in Corporate America’s earnings outlook bodes well for the S&P 500 into the year end. He reiterated his 12-month price target of 6,500 points. The gauge is currently hovering near 6,000.

A slate of strategists including at JPMorgan Chase & Co. and Citigroup Inc. have raised their year-end targets for the S&P 500 in recent days, on bets that the worst shock from Trump’s trade war was over. At Goldman Sachs David Kostin said recent market action suggests investors are pricing an optimistic growth outlook.

“The potential for market swings continues,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “But in our view, this should not impede investors putting cash to work, especially given our continued expectation for US equity gains over 12 months and that both interest rates and cash returns are set to fall as the year progresses.”

With a key inflation read on tap Wednesday as the Federal Reserve enters a blackout period before its June 18 interest-rate decision, money managers are wrestling with what could propel the S&P 500 back to a record after the index soared 20% from its April lows.

Signs of a better-than-expected economic outlook has revived hopes that Chair Jerome Powell will resume reducing borrowing costs as soon as September. At the same time, some are wary that any surprises in inflation and eventual return of volatility may fuel an unwind of wagers on riskier investments and spark another selloff.

Corporate Highlights:

Warner Bros. Discovery Inc. is splitting itself into two publicly traded companies, one with its HBO Max streaming service, film and television business, and the other with its struggling cable business.
Tesla Inc. was hit with a pair of downgrades, underscoring mounting concerns on Wall Street about the electric-vehicle maker’s outlook following last week’s clash between Chief Executive Elon Musk and President Donald Trump.
Both Argus Research and Baird cut the stock to the equivalent of hold ratings.

Some of the main moves in markets:

Stocks