Stock Market Today: S&P 500 Extends 5-Day Winning Streak; Nasdaq Gains 7% on Week as Wall Street Shakes Off Trade War Concerns
May 16, 2025 – U.S. stocks closed out the week on a positive note, with the S&P 500 achieving a five-day winning streak and the Nasdaq Composite rising an impressive 7% for the week. This market rally comes as investors respond favorably to signs of easing tensions in the ongoing U.S.-China trade war, boosting confidence in risk assets despite some lingering economic concerns.
Wall Street Embraces Optimism on Trade Front
Shares opened the week with a surge following a surprise announcement of a U.S.-China tariff rollback, which helped alleviate fears of an escalating trade conflict. The S&P 500 climbed nearly 0.7% on Friday, extending its gains for the fifth consecutive session, while the Dow Jones Industrial Average advanced 0.8%. The Nasdaq, led by strong performances from major technology stocks, added 0.5 on Friday and outpaced other indexes with a weekly gain of approximately 7%.
This strong performance enabled the S&P 500 to erase all its losses for 2025 and finish the week with a modest positive return for the year, signaling a return to a more normalized market environment. However, investors remain cautious following warnings from Walmart regarding tariff-related price increases, highlighting the ongoing economic impact of trade policies.
Consumer Confidence Dips Amid Inflation Worries
While markets rallied, consumer sentiment painted a more cautious picture. The University of Michigan’s consumer sentiment index dropped to 50.8 in May, marking the second-lowest reading on record and down from 52.2 in April. Inflation expectations over the next year surged to 7.8%, the highest level since 1981, underscoring growing concerns among Americans about rising prices and economic uncertainty.
Political Developments Affect Market Dynamics
Market participants also closely monitored developments around President Trump’s sweeping tax and spending bill. Despite the President’s calls for unity, the bill encountered setbacks when Republicans voted against it on Friday. The tax cuts included in the legislation were generally viewed as beneficial for economic growth, but the opposition has slowed the bill’s progress and introduced additional uncertainty.
Meanwhile, President Trump announced that letters informing countries of their new tariff rates would be sent out in the coming weeks, signaling ongoing efforts to manage international trade relationships. However, his administration acknowledged capacity constraints in negotiating deals simultaneously with all trading partners, signaling that further months of negotiation lie ahead.
Sector Highlights and Notable Stock Movers
Technology stocks led the charge this week, with AI chipmaker Nvidia reclaiming positive territory for the year after a strong bounce. Tesla also completed its fourth consecutive week of gains, recovering significantly from a late-April slump amid corporate developments including CEO Elon Musk’s pay package and a new board member addition.
Bitcoin held steady near $104,000, maintaining relative stability amid the broader market gains and continuing to attract investor attention as a potential alternative asset.
Outlook
Investors will continue to keep a close eye on trade negotiations between the U.S. and China as progress on tariffs remains a key driver for market sentiment. Additionally, upcoming economic data releases, including consumer confidence and inflation indicators, will likely influence market direction in the near term. Political developments regarding tax policy also remain an important factor as lawmakers work to reach agreement.
The recent rallies underscore renewed optimism on Wall Street, but market watchers caution that challenges remain amid inflation pressures and geopolitical uncertainty. For now, the momentum is encouraging, with major indices signaling resilience as they close out a notable week in 2025. —
Reporting by Amalya Dubrovsky, Karen Friar, and Ines Ferré for Smart Money Mindset