Steady Growth in U.S. April Retail Data and Easing U.S.-China Trade Tensions, U.S. Stocks Hit New Highs Again

TradingKey - On May 14, Eastern Time, U.S. retail sales data for April showed solid performance, growing by 0.5% and demonstrating the continued resilience of the consumer market. Meanwhile, high-level U.S.-China consultations commenced in Beijing, releasing positive expectations. Driven by multiple tailwinds, the three major U.S. stock indices collectively trended higher, with both the S&P 500 and the Nasdaq hitting fresh record highs. Nvidia ( NVDA) extended its strong performance, recording its seventh consecutive trading day of gains.

Looking at the April retail data, U.S. consumption did not experience the rapid cooling the market had previously feared. Data from the U.S. Census Bureau showed that retail and food services sales grew by 0.5% in April; although this was a significant slowdown compared to the revised 1.6% growth in March, it still indicates that household consumption remains supported. Non-store retailers saw an 11.1% year-on-year increase, while food services and drinking places grew by 2.7% year-on-year.

However, the structure of this data indicates that retail growth was driven to some extent by rising oil prices, with discretionary spending in categories such as automobiles, apparel, and furniture showing divergent performance. Reuters quoted analysts as noting that a strong stock market and significant tax refunds have provided support for household spending, but high oil prices are eroding real purchasing power, suggesting potential pressure on future consumption growth.

Meanwhile, the U.S.-China talks provided additional support for market sentiment. From May 14 to 15, Trump and Xi Jinping held meetings in Beijing. Market attention focused not only on trade itself but also on broader issues such as the Taiwan Strait, energy transportation, and the export of AI chips to China.

Driven by the April retail data and expectations of easing tensions from the U.S.-China talks, all three major U.S. indices strengthened by Thursday's close. The Dow rose 0.75% to 50,063.46; the S&P 500 gained 0.77% to 7,501.24; and the Nasdaq climbed 0.88% to 26,635.22, with the S&P 500 and Nasdaq again reaching record closing highs.

Performance of the three major U.S. stock indices, Source: TradingView

Following news of the meeting, Nvidia became one of the most closely watched stocks. Nvidia CEO Jensen Huang's trip to Beijing with the delegation further fueled market optimism regarding the outlook for AI chip sales. The U.S. has approved approximately 10 Chinese companies to purchase its H200 chips, although actual shipments have not yet commenced.

As a result, tech stocks continued to lead the market. Nvidia closed up 4.39% at $235.74, extending its seven-session winning streak and hitting a new all-time high.

Nvidia daily price chart, Source: TradingView

Overall, the retail sales data for April indicates that U.S. consumption has not lost momentum, while the U.S.-China talks reduced concerns about a further deterioration in trade relations. Furthermore, progress on the sale of Nvidia's H200 to China continued to bolster earnings expectations for the AI industry chain. Macro analysts generally believe that if inflation and energy prices remain elevated, the Federal Reserve will remain cautious in the short term. However, as long as the economy does not significantly weaken, capital is more likely to remain in tech and high-quality growth stocks.