Stock Market Update: S&P 500 Marks 5-Day Winning Streak, Nasdaq Surges 7% as Trade War Concerns Ease
May 16, 2025 — The major U.S. stock indices closed the week on a strong note, buoyed by easing tensions in the ongoing U.S.-China trade negotiations and a broader sense of optimism returning to Wall Street. The S&P 500 extended its winning streak to five consecutive days, erasing all losses experienced earlier in the year. Meanwhile, the Nasdaq Composite surged approximately 7% over the week, marking substantial gains amid renewed investor confidence.
Market Highlights
On Friday, the S&P 500 rose nearly 0.7%, while the Dow Jones Industrial Average climbed by 0.8%. The Nasdaq Composite, which had been the standout performer this week, added another 0.5%. These moves culminated in the Dow increasing over 3% during the week, the S&P 500 more than 5%, and the Nasdaq leading with gains near 7%.
The trading week began with a significant development: a surprise rollback of U.S.-China tariffs. This tariff rollback sparked a broad market rally and helped alleviate fears that had weighed heavily on stocks in the previous months. The thaw in trade hostilities appears to have reassured investors, prompting a rotation back into risk assets, especially growth and technology-oriented stocks.
Notable Performers
Among high-profile winners was Nvidia (NVDA), the artificial intelligence chipmaker, which rebounded strongly to move back into positive territory for the calendar year. Tesla (TSLA) also showed strength, closing out its fourth consecutive week of gains and recovering much of the ground lost since hitting a recent low in late April.
In the cryptocurrency market, Bitcoin hovered near $104,000 by Friday’s close. Despite the sharp stock market rally, Bitcoin has maintained relatively steady levels throughout the week, reflecting cautious but continued investor interest.
Economic and Political Factors at Play
Despite the upbeat performance on Wall Street, consumer sentiment data released Friday painted a more cautious picture for the broader U.S. economy. The University of Michigan consumer sentiment index fell to 50.8 in May, marking the second-lowest reading on record. Inflation expectations further deteriorated, with one-year inflation outlook jumping to 7.8% — the highest level since 1981. This increase in inflation concerns reflects continued anxiety over rising prices and the economic impact of tariffs.
Complicating the economic outlook were political developments surrounding President Trump’s sweeping tax and spending bill. The legislation, aimed at delivering major tax cuts to stimulate the economy, faced resistance in Congress. Despite President Trump’s calls for unity, the bill met a setback Friday when Republicans voted against it, casting uncertainty over its progress and potential impact on markets.
Additionally, the White House indicated plans to issue letters outlining new tariff rates to various trade partners in the coming weeks. However, due to limited negotiation capacity, the administration acknowledged it would not be able to simultaneously engage all trade partners, keeping further developments in the trade landscape a focal point for investors.
Market Outlook
Investors remain watchful for the next major trade developments, hopeful that recent progress with China signals a broader easing of global trade tensions. While the positive momentum in stocks reflects optimism, caution persists amid rising inflation expectations and legislative uncertainties.
As the S&P 500 posts steady gains and tech stocks lead the charge, the market’s reaction suggests that Wall Street is cautiously shaking off worries over trade wars and focusing on potential economic benefits from forthcoming policy and trade agreements.
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