US Stocks Experience Gains Amid Easing Trade Tensions
US stocks increased on Friday, positioning themselves for weekly gains following a reduction in US-China trade tensions. Investors were also watching President Trump’s extensive tax and spending proposal, which encountered significant obstacles on Friday, coinciding with a drop in consumer confidence.
The S&P 500 saw a rise of 0.6%, marking a fourth consecutive day of gains. The Dow Jones Industrial Average rose 0.7%, and the technology-heavy Nasdaq Composite gained almost 0.4%. Overall, Wall Street concluded the week on a positive note, fueled by the surprising rollback of US-China tariffs, sparking a stock market rally.
With the S&P 500 on track for a five-day winning streak, it has fully recovered its 2025 losses, signaling a return to market normalcy as investors re-engage with riskier assets. However, some caution has returned to the market due to Walmart’s warning about potential price increases resulting from tariffs.
Consumer Sentiment Declines
Recent data from the University of Michigan Consumer Sentiment Survey indicates that consumer sentiment fell in May, hitting its second-lowest reading on record at 50.8, compared to April’s 52.2. Inflation expectations for the next year surged to 7.8%, a level not seen since 1981.
As the markets remain alert for updates on Trump’s trade policies, there is a focus on new trade deals and potential shifts in relations with China. The President indicated that the US plans to send out letters informing countries of the tariff rates for their imports over the coming weeks, as his administration manages limited negotiation capacities.
Tax Bill in Focus
The impending vote on Trump’s ambitious tax and spending bill is also under scrutiny amid complex negotiations. Despite Trump’s calls for unity, Republicans voted against the bill, which was seen as potentially beneficial for the economy, resulting in a setback for its progression.
With mixed signals in the market, the investor atmosphere appears uncertain yet cautiously optimistic as developments unfold. Observations from the market will be critical in determining the future trajectory of investor sentiment and economic health.
