Weekly Market Insights | U.S./China Tariff Truce Tames Markets

Stocks roared higher last week, powered by upbeat trade news and tame inflation reports.

The Standard & Poor’s 500 Index rose 5.27 percent closing at 5,958.38, while the Nasdaq Composite Index spiked 7.15 percent closing at 19,211.10. The Dow Jones Industrial Average added 3.41 percent closing 42,356.20. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 0.80 percent.^1,2

S&P, Dow Erase YTD Losses

Stocks pushed higher on Monday as investors cheered weekend news that the U.S. and China temporarily agreed to back off steep reciprocal tariffs.³

The week started with a relief rally as the Trump administration unveiled a trade deal with China just days after announcing another such deal with the UK. The deal between the US and China calls for a 90-day suspension of reciprocal duties on each other's goods. The two sides had been in a trade war since President Donald Trump's announcement of sweeping new tariffs early last month.

On Friday, Trump said the US will unilaterally set tariffs for many other countries soon.

"We will be telling people what they will be paying to do business in the United States," he said.

Still, stocks held on to the week's gains, especially in the technology sector, as a number of corporate deals were signed amid Trump's Middle East tour.

Then, a mild inflation report for April—the slowest annualized Consumer Price Index (CPI) reading in four years—boosted markets on Tuesday. Tech stocks powered the rally as the S&P 500 closed trading in the green for the year.^4,5

All of the S&P 500's sectors posted weekly gains. Technology rose 8.1%, followed by a 7.7% gain in consumer discretionary, a 6.6% rise in communication services and a 5.5% increase in industrials. Energy and financials rose more than 3% each, followed by smaller gains in other sectors.

Super Micro Computer (SMCI) had the largest percentage increase in the technology sector, surging 44% as the company said it signed a memorandum of understanding with DataVolt to develop hyperscale AI campuses in Saudi Arabia. The agreement depends on finalizing one or more binding contracts, with the minimum market value of the planned products estimated at $20 billion, it said. First Solar (FSLR) was also strong, soaring 27% amid a number of positive analyst actions including a rating upgrade from Wolfe Research. First Solar may benefit from a "favorable" US utility-scale solar tax policy, as only "relatively minor changes" were proposed in the Republican budget, UBS said in a note to clients while raising its price target on the stock.

The consumer discretionary sector was boosted by a 17% jump in Tesla's (TSLA) shares. Following the trade deal between the US and China, the electric vehicle maker intends to ship components to the US from China for Cybercab and Semi trucks by the end of May, according to a Reuters report.

In communication services, Fox's (FOX) shares climbed 12% as the media company reported a surprise increase in its fiscal third-quarter earnings. The company's quarterly revenue topped market estimates as the Super Bowl LIX drove sharp gains in its advertising sales.

Health care was the weakest sector, eking out a gain of just 0.3%. UnitedHealth Group (UNH) had the largest percentage drop in the sector, falling 23% as a Wall Street Journal report citing people familiar with the matter said the company is facing a criminal investigation by the US Department of Justice over possible Medicare fraud tied to its Medicare Advantage operations. The company said it hasn't received any notification from the DOJ.

 Friday was the Dow’s turn to erase year-to-date losses and get back in the green while the Nasdaq and S&P notched a five-day winning streak.⁶

All Eyes on Economic Data

The retail (CPI) and wholesale inflation reports (Producer Price Index) were mild, although most economists didn’t expect tariffs to impact prices in the first month of implementation.

Retail sales ticked up slightly (as expected), while industrial production and housing starts showed signs of tariff impact.^7,8

Expect traders to continue to closely watch economic reports to better understand whether tariffs are showing up in the data.

This Week: Key Economic Data

Monday: New York Fed President John Williams, Dallas Fed President Lorie Logan, and Atlanta Fed President Raphael Bostic speak. Leading Economic Indicators. E-Commerce Retail Sales.

Tuesday: Richmond Fed President Thomas Barkin, Raphael Bostic, and Fed Governor Adriana Kugler speak. Financial Markets Conference.

Wednesday: Thomas Barkin speaks. 20-Year Treasury Bond Auction.

Thursday: Existing Home Sales. Jobless Claims (weekly). PMI Composite—Services and Manufacturing. John Williams speaks. Fed Balance Sheet.

Friday: New Home Sales. Kansas City Fed President Jeff Schmid and Fed Governor Lisa Cook speak.

^{Source: Investors Business Daily - Econoday economic calendar; May 16, 2025
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW)

Wednesday: The TJX Companies Inc. (TJX), Lowe’s Companies, Inc. (LOW)

Thursday: Intuit Inc. (INTU), Analog Devices, Inc. (ADI), The Toronto Dominion Bank (TD), Workday, Inc. (WDAY)

^{Source: Zacks, May 16, 2025. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

"People always call it luck when you've acted more sensibly than they have."

– Anne Tyler

The IRS May Send You One of Two Notices If Your Filed Returns Don’t Match Their Records

Have you wondered what happens if the information on your tax return doesn’t match the IRS records? The IRS mails out two notices, CP2100 and CP2100A, to banks, credit unions, businesses, and payers who may have made a mistake on their return. 

The IRS mails these notices out twice yearly, in September/October and April of the following year. Payers may receive a notice if their return lacks a Taxpayer Identification Number, has an incorrect name, or both. The notices also tell payers that they are responsible for backup withholding.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. 

Tip adapted from IRS⁹

This Cognitive Behavioral Exercise Can Help Quiet Your Negative Self-Talk

We all have that little negative voice in our heads, and one way to combat it is to change how we think about situations. Stressful things will always happen, but the goal is to change your feelings about those stressful situations. 

To practice this exercise, separate a piece of paper into three columns. One is for your negative thoughts, one is for the cognitive distortion at play, and one is for your rational response (thinking logically about your feelings). Here’s an example:

Negative thought: I did horribly on my presentation today and am getting fired. 
Cognitive distortion: All-or-nothing thinking, jumping to conclusions.
Rational response: Maybe it wasn’t my best presentation, but overall, the quality of my work is good.

These cognitive exercises take a lot of practice but can help silence your inner critic.

Tip adapted from Healthline¹⁰

What can go down a chimney when it is down but can’t go up through a chimney when it is up?

Last week’s riddle: What always shows up in the middle of March and the middle of April?
Answer: The letter "R."

Ring-neck Pheasant
Utah, United States

Footnotes and Sources

^{1. WSJ.com, May 16, 2025}

^{2. Investing.com, May 16, 2025}

^{3. CNBC.com, May 12, 2025}

^{4. WSJ.com,  May 13, 2025}

^{5. CNBC.com, May 15, 2025}

^{6. MarketWatch.com, May 16, 2025}

^{7. WSJ.com, May 13, 2025}

^{8. MarketWatch.com, May 16, 2025}

^{9. IRS.gov, September 11, 2024}

^{10. Healthline, December 12, 2024}

^{11. MT Newswires,  Ycharts.com, May 12 - 16th, 2025}