Market Indexes Close Higher as Trade Tensions Ease
The U.S. stock market closed higher on Friday, May 16, 2025, capping off an impressive week of gains fueled by easing trade tensions between the United States and China. The S&P 500 (^GSPC) rose 0.4% to end at 5,916.93, marking its fifth consecutive day of gains and an impressive 5% increase for the week.
This week’s rally came after U.S. and Chinese officials agreed to a 90-day truce in their tariff measures, significantly reducing investors’ fears about escalating global trade tensions. Treasury Secretary Scott Bessent’s negotiations with Chinese officials over the weekend have helped stave off concerns about immediate economic decline and inflation spikes.
Tech Stocks Lead the Charge
Technology stocks have been the standout performers this week, with several major players posting substantial gains. Nvidia (NVDA) surged more than 15% for the week, while Tesla (TSLA) matched that performance with a 15% weekly gain.
The tech-heavy Nasdaq has jumped more than 6.5% this week, outpacing both the S&P 500 and the Dow, which gained 5% and 3% respectively.
Economic Data and Consumer Sentiment
Friday’s trading was briefly tempered by the University of Michigan’s consumer sentiment index, which fell to 50.8 in May from 52.2 in April—the second-lowest reading on record.
Earlier in the week, economic data showed retail sales rose just 0.1% in April, down from March’s 1.7% jump but still viewed positively by investors.
Wall Street Optimism Grows
The market’s strong performance has prompted several Wall Street firms to raise their year-end targets for the S&P 500. Goldman Sachs increased its projection to 6,100 from 5,900, while Yardeni Research boosted its forecast to 6,500 from 6,000.
“We raise our S&P 500 return and earnings forecasts to incorporate lower tariff rates, better economic growth, and less recession risk than we previously expected,” Goldman Sachs chief US equity strategist David Kostin noted.
Upcoming Market Events
Investors should keep an eye on several key economic releases in the coming week. Flash PMI data for May will be published on Thursday, May 22, providing insights into business conditions following recent trade policy changes.
Other significant upcoming events include housing starts and permits data, import and export prices on Friday, May 16, and China’s industrial production and retail sales figures on Monday, May 19.
Corporate News
In corporate news, Walmart (WMT) shares declined despite beating earnings expectations, as the retail giant announced plans to raise prices later this month due to tariffs.
As global trade tensions ease and economic data continues to provide mixed signals, investors remain cautiously optimistic about market prospects for the remainder of the second quarter.