The S&P 500 was nearly unchanged, capping a strong month where the index gained 6.2% as investors largely overlooked trade policy uncertainties. The broad index dipped by 0.01% to end at 5,911.69. The Dow Jones Industrial Average fell 0.32% to 19,113.77, while the Nasdaq Composite added 54.34 points, or 0.13%, to finish at 42,270.07.
Friday marked the end of a robust May for the market. The Nasdaq surged 9.6% throughout the month, achieving its best performance since November 2023. Meanwhile, the Dow gained 3.9% in May.
For the week, the S&P 500 rose 1.9%, the Dow was up 1.6%, and the Nasdaq advanced 2%. Stock prices initially fell on Friday after President Donald Trump asserted that China had violated its current trade agreement with the U.S. Trade tensions spiked again after reports emerged that the U.S. planned to expand restrictions on China’s tech sector. This development followed a statement from Treasury Secretary Bessent, who confirmed that U.S.-China trade talks were “a bit stalled.”
Investors remain on edge about the potential for a long-term trade agreement between the two nations, as the Trump administration’s proposed tariffs face legal challenges.
The U.S. Court of International Trade recently challenged the tariffs, leading to an ongoing legal battle and further market uncertainty. An appeals court allowed the tariffs to remain temporarily effective, adding another layer of complexity. Amidst this turbulent backdrop, market performance varied by sector.
Health care was the only S&P 500 sector to see a monthly decline, falling 5.8% due to significant losses in key stocks.
Market resilience amid trade tensions
Notably, shares of a leading health company dropped after the company suspended its annual forecast and announced the departure of its CEO, along with a Department of Justice investigation into potential Medicare fraud.
Another major stock in the sector plunged 19% in May and 20% on Friday alone after disappointing trial results for a respiratory drug. Despite Friday’s downturn, the S&P 500 was on track for its best monthly performance since November 2023, with a 5.8% gain. The tech sector outperformed in May, surging more than 10%, though it remains down 2% for the year.
Small-cap stocks lagged, with the Russell 2000 index slipping 0.8% in the Friday session but rising nearly 1% over the week. Consumer sentiment showed slight improvement according to the University of Michigan survey, with optimism increasing slightly due to easing trade tensions. The survey showed a reading of 52.2, flat from April but better than the mid-month level.
Friday’s trading session also saw significant movements in various stocks. The wholesaler Costco gained over 3% after surpassing analyst estimates. Ulta Beauty’s shares soared nearly 13% to a 52-week high, driven by strong quarterly results.
In contrast, Gap Inc.’s shares plunged 20% after the company provided a flat sales forecast for the current quarter, overshadowing its earnings and revenue beat. Tech giant Nvidia experienced post-earnings volatility, with its stock initially rising 6.2% on strong data center business growth before closing below the opening price. As the markets wrapped up May, investors prepared for future uncertainties, particularly regarding international trade policies and their impact on economic conditions and corporate earnings.
