Stock Market Update: S&P 500 Hits Five-Day Winning Streak, Nasdaq Jumps 7% Amid Easing US-China Trade Tensions
May 16, 2025 | By Amalya Dubrovsky, Karen Friar, and Ines Ferré
Wall Street closed the week on a strong note as the major U.S. stock indices notched significant gains, driven by easing trade war fears and renewed investor optimism. The S&P 500 extended its winning streak to five consecutive days, while the Nasdaq Composite surged by roughly 7% over the week, underscoring a broad-based rally in equities.
S&P 500 and Nasdaq Lead the Gains
On Friday, the S&P 500 increased by nearly 0.7%, bringing its performance to a remarkable positive territory for the year—fully erasing its prior 2025 losses. The Dow Jones Industrial Average rose 0.8%, and the tech-heavy Nasdaq Composite added about 0.5%, closing the week with a gain of approximately 7%. The Dow also recorded a robust weekly advance of over 3%, highlighting widespread market enthusiasm.
Investors have responded favorably to a surprise rollback of tariffs between the United States and China, which sparked the week’s initial rally. The reduction in tensions has encouraged a return to riskier assets, pushing stocks higher after a period of uncertainty over trade policies.
Trade War Developments and Government Policy
The week began with encouraging news as the U.S. and China agreed to ease tariffs, signaling a thaw in the prolonged trade conflict that has weighed on global markets. U.S. President Donald Trump announced plans to send letters to various countries outlining new tariff rates on their imports in the coming weeks, underscoring continued trade negotiations. However, the administration faces logistical challenges in simultaneously managing deals with multiple trade partners.
Despite this progress, some caution persists. Retail giant Walmart issued warnings about tariff-induced price increases, reminding investors that the impact of trade policies remains a critical factor in economic and corporate outlooks.
On the domestic policy front, attention also centered on President Trump’s ambitious tax and spending bill. Although the legislation promises substantial tax cuts with the potential to stimulate economic growth, it encountered a setback when Republicans voted against it, complicating its path forward. Negotiations around the bill are ongoing, reflecting the complexity of reaching consensus on fiscal priorities.
Consumer Sentiment and Inflation Concerns
In contrast to the market’s buoyancy, consumer confidence took a hit in May. According to the University of Michigan’s latest consumer sentiment survey, the index dropped to 50.8—its second-lowest reading on record and down from 52.2 in April. Inflation expectations among consumers rose sharply to 7.8%, reaching levels not seen since 1981. This signals growing concern among Americans about the pace of inflation, which could influence spending behavior and economic growth.
Sector Highlights and Individual Stock Performances
Technology stocks led the weekly rally, with semiconductor heavyweight Nvidia (NVDA) returning to positive territory for the year after a strong week of gains. Tesla (TSLA) also marked its fourth consecutive week of stock appreciation, recovering much of its losses from late April amid renewed investor interest.
Meanwhile, Bitcoin (BTC-USD) remained relatively stable near $104,000 as the broader market climbed, reflecting continued interest in cryptocurrencies despite recent volatility.
Looking Ahead
Investors remain focused on upcoming developments in the U.S.-China trade relationship, anticipating further negotiations and potential deals that could bolster market confidence. The trajectory of government fiscal policies and inflation trends will also be critical factors influencing market dynamics in the near term.
As the S&P 500 maintains its upward momentum and the Nasdaq records impressive gains, market participants are cautiously optimistic while staying attentive to underlying economic challenges.
For ongoing coverage of market trends, trade negotiations, and economic analysis, stay tuned to Smart Money Mindset.