Stock Market Update: S&P 500 Secures Five-Day Winning Streak, Nasdaq Surges 7% Amid Easing Trade War Concerns
By Amalya Dubrovsky, Karen Friar, and Ines Ferré | Updated May 16, 2025, 7:05 PM
U.S. stock markets closed the week on a high note, as the S&P 500 extended its winning streak to five days while the Nasdaq Composite posted a significant 7% gain over the week. The positive momentum follows easing tensions in the ongoing U.S.-China trade war and investors’ optimistic response to developments around trade agreements, despite underlying worries related to consumer confidence and political hurdles facing major legislation.
Markets Rally on Trade Optimism
On Friday, all three major U.S. indexes advanced, capped by a 0.7% gain for the S&P 500, 0.8% for the Dow Jones Industrial Average, and 0.5% for the Nasdaq Composite. The week kicked off with a surprise rollback of U.S.-China tariffs, sparking a rally across the markets that lifted investor sentiment and restored some sense of normalcy after earlier volatility.
The S&P 500 erased all its losses for 2025, moving solidly into positive territory for the year. The Dow also showed robust gains, finishing the week up more than 3%, while the technology-heavy Nasdaq led with a notable weekly rise of approximately 7%.
Investors have been quick to re-enter riskier assets amid the improving trade outlook, though caution persists due to concerns sparked by Walmart’s warning on potential price increases resulting from tariffs. This mixed environment reflects cautious optimism as markets weigh the benefits of easing trade tensions against the realities of tariff-driven cost pressures on consumers.
Consumer Sentiment Dips Sharply
Contrasting with the upbeat market performance, the University of Michigan’s consumer sentiment index revealed a sobering backdrop. Consumer confidence plunged to 50.8 in May, marking the second-lowest reading on record and a decline from April’s 52.2. Inflation expectations also surged, with one-year inflation projections rising to 7.8%—the highest level since 1981. The drop in sentiment underscores the persistent inflationary pressures felt by everyday Americans and signals potential headwinds for consumer spending, which remains a critical driver of the U.S. economy.
Political Developments and Trade Negotiations in Focus
Adding complexity to the market environment, President Trump’s comprehensive tax and spending bill faced a setback on Friday when key Republican factions opposed the measure, halting its progress in Congress. The bill, which includes substantial tax cuts expected to bolster economic growth, remains a work in progress amid ongoing negotiations.
Meanwhile, the administration reaffirmed its strategy on tariffs, with President Trump announcing that letters would soon be sent to trading partners detailing upcoming tariff rates on imports. Officials emphasized that due to limited negotiation capacity, separate deals with different countries would roll out gradually rather than simultaneously, signaling an extended period of careful diplomatic and trade management.
Notable Market Movers and Cryptocurrency
Several high-profile stocks stood out this week. Nvidia, a leading AI chip manufacturer, returned its shares to positive territory for 2025 following strong gains, while Tesla completed its fourth consecutive week of upward movement, recovering much of its recent April losses.
In the cryptocurrency space, Bitcoin steadied near $104,000 on Friday, maintaining relative stability amidst the broader market upswing.
Looking Ahead
As Wall Street closes out a strong week powered by hopes of improved U.S.-China trade relations and the potential for legislative breakthroughs, investors remain attentive to forthcoming trade negotiations and political developments. The market’s ability to shake off tariff concerns and consumer pessimism will be tested in the weeks ahead, but current trends suggest a cautious but optimistic outlook for risk assets as the year progresses.
For continued coverage of market developments, trade updates, and investment insights, stay tuned to Smart Money Mindset.