By Heather Gillers and Joe Wallace
An improving trade relationship with the United Kingdom and hopes for talks with China sparked a stock rally on Thursday, driving the Dow Jones Industrial Average up more than 250 points.
The blue-chip index rose 0.6 % after President Trump and others spoke in the Oval Office to showcase what he billed as a "full and comprehensive" trade agreement with the U.K.
Trump outlined benefits for both countries and said the administration has more trade discussions in coming days. He said investments in the U.S. from this and future trade deals could amount to $10 trillion. Major indexes then extended their climb after he expressed high hopes for reaching a trade deal with China, the third-largest supplier of goods to the U.S.
"Better go out and buy stocks now," the president said. "This country will be like a rocket ship that goes straight up."
The U.K. deal is the first of its kind since the administration unleashed broad trade restrictions five weeks ago, sparking market turmoil. Stocks have since climbed at any sign of de-escalation, with many investors hoping the administration can reach deals that will minimize the blow to economic growth and corporate profits.
Treasury Secretary Scott Bessent is traveling to meet China's lead economic representative, potentially paving the way for broader trade talks with the world's second-largest economy. Trump said in his remarks that he could possibly talk with China's Xi Jinping following those conversations. "We're gonna have a good weekend with China," Trump said.
Analysts said those remarks stoked investor confidence at least as much, if not more, than the deal with the U.K.
"I do think all eyes are on China," said Jay Hatfield, chief executive at Infrastructure Capital Advisors. "Half the trade problems is China and the other half is the whole rest of the world."
The WSJ Dollar Index, which measures the U.S. currency against a group of others, rose 0.7%. Bitcoin traded above $100,000.
Investors pulled back on havens. Gold futures fell 2.5%. The yield on the benchmark 10-year Treasury, which rises when bond prices fall, climbed to 4.373%, according to Tradeweb, from 4.272%. That marked its biggest one-day gain in a month.
Hopes for a less aggressive U.S. tariff policy also caused traders to scale back bets on interest-rate cuts. On Wednesday, the Fed said tariffs raised the risk of higher unemployment and inflation.
Interest rate futures showed Thursday afternoon that traders still expect the Fed to cut rates at least three times, or 0.75 percentage point, by the end of this year, according to CME Group data. But those implied chances fell to under 60% from 75% Wednesday and 88% a week ago.
The chances of two cuts jumped to 30% from 20% Wednesday, while the chances of one cut roughly doubled to 11%.
The shift in rate expectations led to particularly large gains in shorter-term Treasury yields.
The yield on the 2-year note climbed to 3.894%, its highest closing level since April 11.
All three major indexes are up so far this month, with the Nasdaq recovering all of the ground lost after Trump first announced his tariff campaign in early April. The Dow and S&P have risen for 11 of the past 13 trading days.
Elsewhere, the Bank of England cut interest rates. The regional Stoxx Europe 600 rose 0.4%. Asian stocks were broadly higher.
In the auto industry, Japanese heavyweight Toyota said tariffs would result in a $1.2 billion hit over just two months.
Write to Heather Gillers at heather.gillers@wsj.com and Joe Wallace at joe.wallace@wsj.com
(END) Dow Jones Newswires
May 08, 2025 17:19 ET (21:19 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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