By Alex Eule | Friday, May 9

'Scott B' Goes to Switzerland. It's likely to be a weekend full of trade headlines, so traders spent the second half of Friday sitting on their hands. The major indexes all finished roughly flat.

U.S. Treasury Secretary Scott Bessent is scheduled to meet with Chinese  trade representatives tomorrow in Switzerland. The meeting could lead to a thawing of the trade war between the world's two largest economies.

That was the hope early this morning, pushing stocks higher at the open, but they gradually lost ground, perhaps as reality set in. A meeting of representatives might not change the economic reality. Even if U.S. tariffs on China are cut in half (from up to 170% currently), they would still be painful for businesses and consumers. 

"80% Tariff on China seems right! Up to Scott B.," President Donald Trump wrote this morning on social media.

For tariff-averse markets that was good news and bad news. First the good, as my colleagues wrote today: 

The comments represent a shift that illustrates the possibilities for the weekend. After saying earlier in the week that he wouldn’t roll back tariffs on China ahead of the talks, Trump appeared to give the Treasury secretary a green light to do just that.

"The President and his team seem ready to address issues that have been raised by his tariff policy, and the weekend talks with China are obviously key," L. Thomas Block, Washington policy strategist for Fundstrat, wrote to clients today.

The bad news is that lowering tariffs to 80% might not be enough to unfreeze U.S.-China trade. "Analysts note the rate needs to be below 60% for trade to resume," my colleagues write. 

Outside of trade, the data remain supportive for U.S. stocks. Earnings season is largely complete, with major retailers among the lone holdouts. (Walmart reports next week.)

Generally speaking, earnings season has been solid. Thus far, 78% of S&P 500 companies have reported better-than-expected earnings, according to FactSet, just above the five-year average of 77%. What really mattered this quarter, though, was what companies said about their outlooks. Here too, the news was better than feared. In fact, the percentage of S&P 500 companies offering better-than-expected outlooks for the current quarter is higher than usual, FactSet notes. (Out of 75 forecasts, 45% have been positive, versus a five-year average of 43%.) 

The problem for investors? Earnings season will be coming to an end just as the impact of tariffs begin to hit U.S. shores. Some of the first goods facing those full 170% tariffs are just now arriving at U.S. ports. 

Watch our TV show on Fox Business Saturdays and Sundays at 9:30 a.m. and 10:30 a.m. ET. This week, investment advisor Barry Ritholtz on the market's calculations in assessing the tariff impact. Plus, what's behind a rough week for biotech stocks.

DJIA: -0.29% to 41,249.38
S&P 500: -0.07% to 5,659.91
Nasdaq: +0.004% to 17,928.92

The Hot Stock: Insulte +20.9%
The Biggest Loser: Akamai -10.8%

Best Sector: Energy +1.0%
Worst Sector: Healthcare -1.1%

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