Market Recap – Monday, May 12, 2025
Trade Relief Boosts Market, Fed Patience Keeps Investors on Edge
Stocks saw strong gains today, with the S&P 500 up 3.26% and the Nasdaq jumping 4.35%. Big tech companies like Amazon and Meta were the main drivers of the rally. The S&P 500 is now only about 5% below its record high from February, and it’s now almost even for the year. Smaller companies also had a good day, with the Russell 2000 up 3.42%. Sectors like energy, technology, and apparel led the charge.
Good News on Trade with China
One of the big reasons for the rally was news that the US and China are making progress on reducing tariffs. The US will lower tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on US goods from 125% to 10%. This was better than expected and helped boost market confidence. President Trump even suggested that tariffs could be lowered even further, which added to the positive sentiment.
Federal Reserve's Patience
The Federal Reserve is still taking a "wait and see" approach when it comes to adjusting interest rates. While the US economy is still doing well, there’s a lot of uncertainty, especially with tariffs and their potential effects on prices. The Fed is staying patient as they figure out how these changes will impact the economy.
Earnings Reports and Global News
On the corporate side, NRG Energy saw a huge jump in its stock after announcing a big acquisition deal. Meanwhile, Newmont, a gold mining company, and BWX Technologies, a nuclear energy company, both saw their stock prices drop. Globally, there’s tension between India and Pakistan, and President Zelensky of Ukraine challenged Putin for peace talks, which could affect global markets.
Looking Ahead
Tomorrow, the government will release the latest inflation report, which could show price increases in things like vehicles due to tariffs. The next few days will also bring reports on retail sales and manufacturing, which will help give a clearer picture of how the economy is doing.
Here’s Our Take
Today’s stock rally was driven by optimism around trade between the US and China, as well as strong earnings from some companies. The market has bounced back from recent drops, but some of the good news may already be reflected in stock prices. While trade tensions have eased, there’s still uncertainty around the long-term effects of tariffs. For investors, it’s important to focus on sectors that are benefiting from trade relief, like technology and energy, but also keep an eye on inflation and any future decisions the Federal Reserve might make.
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