Market Recap – Monday, May 19, 2025
A Mixed Start to the Week with Key Trade, Inflation, and Earnings Updates
The stock market ended mostly higher today. The S&P 500 gained a bit, continuing its six-day streak of small increases. It's now up 19.5% from its low in April. The Nasdaq stayed nearly flat, and the Dow and Russell 2000 saw modest gains. Some parts of the market performed well, especially managed care, pharma, and software stocks. However, big tech stocks like Tesla didn’t do as well.
Key Drivers of the Day
US Credit Rating: The big news that weighed on the market last Friday was Moody’s downgrading the US credit rating. This made some investors nervous at first, but stocks bounced back as the day went on.
Trade Tensions: Trade talks are still in the spotlight. President Trump mentioned that the US may change tariff rates soon. Some countries, including Japan and South Korea, are close to making deals with the US. However, trade uncertainty continues to be a concern.
Inflation and Fed Comments: The Federal Reserve (Fed) continues to be cautious about inflation. Some officials are hinting that they may hold off on cutting interest rates for a while.
Sector Performances
Winners: The healthcare sector had a strong day, with companies like UnitedHealth and Humana seeing positive movement. Pharma and biotech stocks also performed well.
Losers: Tesla and semiconductor stocks were down. Energy stocks and regional banks also had a tough day.
Corporate News
JPMorgan reaffirmed its financial guidance for the year.
Tesla is offering more discounts to boost sales, which caused some concern in the market.
UnitedHealth saw a boost thanks to insider purchases of the stock.
Stocks to Watch
Novavax jumped 15% after getting FDA approval for its COVID-19 vaccine.
Sable Offshore rose 14.4% after restarting oil production.
UnitedHealth rose 8.2% due to insider buying.
TXNM Energy agreed to be acquired for $11.5 billion, which sent its stock up by 7%.
Stocks That Declined
First Solar dropped 7.6% after news that clean energy tax credits may end sooner than expected.
Tesla fell 2.3% after reports of rising inventory and discounting.
Take-Two Interactive dropped 2.4% after weaker-than-expected future earnings guidance.
Key Developments
Moody’s downgrade of the US credit rating caused some market worry, though it didn't lead to lasting weakness.
Walmart faced pressure after President Trump said the company should take on more of the tariff costs.
Trade talks continue to progress, but there’s still uncertainty over how the US will handle tariff rates in the near future.
Here’s Our Take
The market ended mostly higher today, with some sectors, especially healthcare and pharma, performing well. However, big tech stocks like Tesla were under pressure. There’s still a lot of uncertainty around trade, inflation, and the US credit rating, but many sectors, like healthcare and biotech, are benefiting from current trends.
Even with some challenges, the overall outlook is positive for sectors tied to AI, biotech, and consumer services. Investors should remain cautious and keep an eye on upcoming economic reports, especially those related to consumer sentiment and the housing market, as these could give us more clues about how the economy is doing.
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