Market Surges on US-China Trade Truce: What’s Moving the Market Today

Based on the information gathered, I’ll now write the requested article about the stock market for Friday, May 16, 2025.

Major Indexes Continue Upward Momentum as Trade Tensions Ease

The stock market is extending its winning streak on Friday, May 16, 2025, as investors continue to celebrate the temporary reduction in tariffs between the United States and China. The S&P 500 is trading around 5,930 in early morning trading, up approximately 0.2% from yesterday’s close of 5,916.93, marking what could become its fifth consecutive day of gains. The Dow Jones Industrial Average is also showing strength, hovering near 42,400, building on yesterday’s close of 42,322.75.

The tech-heavy Nasdaq Composite, which underperformed yesterday with a 0.18% decline to 19,112.32, is attempting to rebound today as technology stocks continue their recovery from earlier losses this year.

US-China Trade Deal Fuels Market Optimism

The market’s recent rally has been primarily driven by easing trade tensions following productive talks between Treasury Secretary Scott Bessent and Chinese officials last weekend. The agreement to temporarily slash tariff rates has boosted investor confidence and alleviated concerns about potential economic slowdowns and inflation spikes.

“This trade truce has created a significant tailwind for stocks, especially in the technology sector,” said market analyst Jane Reynolds. “The removal of immediate tariff concerns has allowed investors to refocus on company fundamentals and growth prospects.”

Tech Giants Lead the Recovery

Technology stocks have been the standout performers this week, with several “Magnificent 7” companies posting impressive gains. Nvidia (NVDA) has surged more than 16% this week, reclaiming its $3 trillion market cap and turning positive for 2025. The AI chip giant received additional positive news after CEO Jensen Huang announced the company would sell more than 18,000 of its top AI chips to Saudi Arabia.

Tesla (TSLA) has also performed strongly, up more than 14% this week despite remaining down 13.4% year-to-date. Meta Platforms (META) has added 10% this week and is now up 12.7% for the year, making it the best performer among the Magnificent 7 stocks.

Other tech giants showing strength include Amazon (AMZN) and Alphabet (GOOGL), up more than 6% and 7% respectively this week, though both remain in negative territory for the year.

Upcoming Earnings and Economic Data

Investors are closely watching today’s earnings reports, with several companies reporting before the market opens. RBC Bearings Incorporated (RBC) is expected to report earnings of $2.53 per share for the quarter ending March 31, representing a 6.30% increase compared to the same quarter last year. Flowers Foods, Inc. (FLO) is anticipated to report earnings of $0.38 per share, unchanged from the previous year.

Flash PMI Data to Provide Insights on Tariff Impact

Next week, markets will be focused on flash PMI data scheduled for release on Thursday, May 22. These reports will provide important guidance on the impact of changing global trade conditions among major economies midway through the second quarter of 2025.

Previous PMI surveys have highlighted how global growth slowed to the lowest level in nearly one-and-a-half years in April, with global exports falling at the sharpest rate in over two years. Business optimism also slumped to its lowest since the early months of the pandemic.

Federal Reserve Rate Cut Expectations

Bond traders are closely monitoring inflation data for clues about the Federal Reserve’s path for interest rates. Markets are currently pricing in the first 0.25% rate cut in September, a shift from previous expectations for June. The benchmark 10-year Treasury yield recently hit its highest levels in over a month, around 4.5%.

Corporate News Making Headlines

In corporate news, Meta Platforms shares declined yesterday following a report that the social networking company is delaying a flagship artificial intelligence model known as “Behemoth.” According to the Wall Street Journal, Meta engineers are having trouble improving the capabilities of the software, and its release has been postponed until fall or later.

UnitedHealth Group (UNH) continues to face pressure after suspending its 2025 guidance as CEO Andrew Witty stepped down immediately in a surprise move. The company’s shares fell sharply by 18% on Tuesday, weighing on the Dow Jones Industrial Average.

Market Outlook

As we head into the weekend, market sentiment remains cautiously optimistic. The S&P 500 has staged a remarkable recovery, wiping out its 2025 losses in a stunning turnaround just over a month after plunging to yearly lows amid President Trump’s initial tariff announcements.

However, analysts caution that while the immediate tariff concerns have been addressed, the long-term impact of trade policies remains uncertain. Major companies continue to brace for potential tariff effects, with Honda (HMC) recently warning of an expected $3 billion hit to full-year profit from Trump’s new auto duties.

As global economic conditions evolve and corporate earnings continue to roll in, investors should stay vigilant and prepared for potential market volatility in the coming weeks.