U.S. Stocks Cap Strong May Amid Tech Gains and Trade Tensions

The S&P 500 posted its best May performance since 1990, climbing 6% despite a flat finish on Friday. The Dow edged up 0.13%, while the Nasdaq dipped 0.3% after recovering from an earlier 1.6% slide. For the month, the Nasdaq surged nearly 10%, fueled by relentless momentum in tech shares, while the Dow added 4%.

Geopolitical headwinds emerged as the TRUMP administration moved to expand tech export restrictions on China, targeting subsidiaries of firms on the Entity List. Former President Trump accused China of violating its trade deal, while Treasury Secretary Scott Bessent described negotiations as ’stalled.’ A Trump-Xi call may be needed to break the deadlock.

Legal uncertainty around tariffs added to market anxiety. A U.S. appeals court temporarily upheld Trump-era tariffs, reversing a trade court’s decision. The administration is also considering a 15% duty under the Trade Act of 1974. Despite these challenges, cooling inflation data provided a counterbalance, with the Fed’s Core PCE metric showing signs of moderation.