Wall Street Ends Week Strong: Nasdaq Surges 7%, S&P 500 Logs 5th Consecutive Gain

U.S. Stock Markets Rally as Trade War Tensions Ease and Risk Appetite Returns

U.S. equity markets concluded the week on a robust note, buoyed by easing trade tensions between the U.S. and China and a renewed appetite for riskier assets. The S&P 500 rose nearly 0.7% on Friday, marking its fifth straight day of gains and erasing its 2025 losses to turn positive for the year. The Dow Jones Industrial Average climbed 0.8% during the session, while the Nasdaq Composite outperformed with a 0.5% gain, pushing its weekly advance to an impressive 7%.

The rally was sparked earlier in the week after Washington and Beijing reached a temporary pause in the ongoing trade conflict, triggering a wave of optimism across global markets. While some caution returned later in the week due to rising consumer pessimism and concerns over inflation, equities broadly maintained their upward momentum.

Highlights:

• S&P 500 closed up nearly 0.7% on Friday, up over 5% for the week.

• Nasdaq Composite gained 0.5% Friday, up 7% for the week.

• Dow Jones Industrial Average rose 0.8% Friday, adding over 3% for the week.

• Markets rebounded following easing in U.S.-China trade tensions.

• S&P 500 turned positive for 2025, erasing earlier year-to-date losses.

Investor Sentiment Mixed as Inflation Expectations Climb and Consumer Confidence Sinks

Despite the equity rally, consumer sentiment data released Friday underscored growing unease among American households. The University of Michigan’s consumer sentiment index fell to 50.8 in May, down from 52.2 in April and the second-lowest reading on record. Notably, one-year inflation expectations surged to 7.8%, the highest level since 1981, as Americans continued to grapple with persistent price pressures.

The sharp divergence between investor optimism and consumer pessimism reflects a growing disconnect between Wall Street and Main Street, fueled in part by the complexity of fiscal and trade policy developments under the Trump administration. Retailers, including Walmart, have warned of rising costs due to tariffs, further amplifying inflation fears.

Highlights:

• Consumer sentiment fell to 50.8 in May, second-lowest on record.

• Inflation expectations for next 12 months surged to 7.8%, highest since 1981.

• Disconnect grows between strong market performance and weak household confidence.

• Walmart warns of price increases tied to rising import tariffs.

Trump’s Tariff Strategy in Spotlight Amid Legislative Setback on Economic Bill

Markets also tracked developments in Washington, where President Trump’s sweeping tax and spending bill encountered a major obstacle. Despite Trump’s push for party unity, House Republicans voted against advancing the legislation, which proposes significant tax cuts aimed at stimulating economic growth. The failed vote marks a key setback for the White House’s domestic economic agenda.

Simultaneously, Trump reaffirmed his administration’s plans to recalibrate tariffs for all major trading partners. Speaking from the UAE, Trump confirmed that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick would begin issuing letters to foreign governments outlining the new tariff rates “within weeks.” These changes are being introduced incrementally due to limited administrative capacity.

Highlights:

• Trump’s tax and spending bill stalled after Republican opposition in House.

• Bill promises sweeping tax cuts, seen as stimulative for the economy.

• Administration to issue new tariffs for trade partners in phased rollout.

• Trade uncertainty remains, but markets view tariff policy as more predictable.

Tech and AI Stocks Lead Weekly Gains, Bitcoin Holds Steady

Tech stocks led this week’s surge, with the Nasdaq Composite notching a 7% weekly gain thanks to strong performance from key names in artificial intelligence and electric vehicles. Nvidia (NVDA) rose sharply during the week following multiple international chip supply deals and signs of improving U.S.-China trade relations. Tesla (TSLA) also extended its winning streak to four weeks, rebounding from a low on April 21 and continuing its recovery into May.

Bitcoin (BTC-USD) remained stable throughout the week, hovering around $104,000 on Friday. The cryptocurrency’s relative steadiness stood in contrast to more volatile sectors, as traders viewed digital assets as a hedge amid inflation and macroeconomic shifts.

Highlights:

• Nvidia stock surged this week, regaining positive territory for 2025.

• Tesla posted a fourth straight weekly gain after rebounding from April lows.

• Bitcoin traded near $104,000, maintaining stability amid broader market gains.

• Tech and AI-related equities led the market recovery on improved sentiment.