- U.S. markets ended May strong, with the S&P 500 posting its best May since 1990.
- Tech stocks led gains as the Nasdaq surged 10%, while trade tensions with China cooled Friday’s rally.
- Tariff uncertainty and stalled U.S.-China talks tempered optimism despite easing inflation concerns.
U.S. equity markets finished the week’s session mixed on Friday, having recovered from earlier falls and wrapping up a lively and busy May. The benchmark S&P 500 finished approximately level on the last day of May, ending the month with a 6% rise, the strongest May increase since 1990. The Dow Jones Industrial Average gained 0.13%, compared to the Nasdaq Composite dropping by around 0.3%, after trading down more than 1.6% much of the day.
Nasdaq Gains 10% on Tech Stock Strength
The S&P 500 ended most days little changed, yet May saw major indexes record solid gains. May saw the Nasdaq grow nearly 10% as people continued to show interest in technology shares. The Dow was up 4% this past month. A fresh worry about U.S. limitations on Chinese technology and worsening trade tensions helped keep Friday’s movement in stocks rather cool.
A Bloomberg report indicates that the Trump administration plans to increase rules on selling technology to subsidiaries of companies already listed on the Entity List. President Donald Trump accused China of breaking its current trade agreement shortly before the US made the announcement which he did on social media.
Secretary Bessent made the situation more tense by saying that trade talks with Beijing have not moved forward. He said that having Trump and Xi Jinping discuss face-to-face might be helpful for resuming talks.
New Trade Tariffs Under Consideration by U.S.
There was more uncertainty about U.S. tariffs which worsened the mood of market investors. The decision of an earlier trade court to remove Trump-era tariffs was overturned by an appeals court. It has also been announced that the administration is looking into imposing a tariff of 15% for around 150 days using provisions in the Trade Act of 1974.
Despite the changes, developments in inflation helped ease doubts among investors. As anticipated by economists, the core Personal Consumption Expenditures (PCE) index rose in April. Reading the report made many investors feel at ease about further hikes in interest rates.
Health care was the only industry in the S&P 500 to go down, decreasing about 6% over the month. All main sectors finished May higher except industrial materials which was supported by inflation coming down and tech performing well.
Gains held by markets as June begins have investors still feeling cautious. The stability in the economy does not change the fact that new developments in trade and international politics add challenges to sentiment.
