Stocks rally: Dow experiences gain, S&P 500 posts strongest May growth since 1990.
U.S. stocks displayed a mixed performance on Friday, concluding a volatile and generally positive May. The S&P 500 ended the day marginally unchanged but registered a 6% monthly gain, marking its best May since 1990. The Dow Jones Industrial Average rose 0.13%, while the tech-heavy Nasdaq Composite slipped 0.3%. Earlier in the session, the Nasdaq fell over 1.6% before recovering due to renewed trade tensions and reports of tightened U.S. tech restrictions on China.
For the month, the Nasdaq Composite saw a nearly 10% surge, as technology shares continued to drive momentum. The Dow Jones Industrial Average added 4%. The subdued finish for Friday follows reports of expanding U.S. tech restrictions on China, with plans to tighten export rules targeting subsidiaries of firms already on the Entity List. According to Bloomberg, this move is intended to limit China's access to advanced technology.
Hours earlier, former President Trump accused China of violating its existing trade deal on social media. Treasury Secretary Janet Yellen suggested that talks with China are "stalled" and that a Trump-Xi call might be necessary to advance negotiations.
A trader made $17 million by betting against James Wynn's high-risk strategy, while legal uncertainty surrounding tariffs added to investor anxiety. A U.S. appeals court temporarily allowed Trump-era tariffs to remain in place, reversing a trade court's earlier decision. The administration is also considering imposing a 15% duty for up to 150 days under the Trade Act of 1974.
Despite the geopolitical and legal headwinds, investors found optimism in cooling inflation. The Fed's preferred inflation gauge, the core Personal Consumption Expenditures index, rose in line with forecasts in April, helping to temper fears of further rate hikes. Healthcare was the only sector in the S&P 500 to post a monthly loss, down nearly 6%. All other major sectors finished May with gains, buoyed by easing inflation and strength in tech.
As markets head into June, gains remain intact, but trade policy remains a significant risk. The U.S. government has recently intensified its tech restrictions on China, which could impact both countries and the global stock market. The restrictions could severely hamper China's ability to design and manufacture advanced semiconductors, leading to increased reliance on foreign suppliers and potential disruptions in the global supply chain. This could lead to volatility in stock markets worldwide, affecting both technology and broader indices. The expanded tech restrictions on China highlight the complex interplay between geopolitical tensions, technological advancements, and financial markets, and will likely continue to influence stock markets and global economic stability.
- In the face of expanding U.S. tech restrictions on China and potential trade disruptions, crypto investors might consider diversifying their portfolios, including tokens on decentralized exchanges (DEXs) like Tron.
- While the stock-market closed May on a mixed note, the surge in tech shares (such as the Nasdaq Composite) and cooling inflation have given investors reasons to be optimistic about their crypto and traditional stock investments.
- As the U.S. government tightens export rules targeting subsidiaries of firms already on the Entity List, this could impact not only technology stocks but also crypto finance, as many tech firms have ties to the crypto sector.
- With the complex interplay of geopolitical tensions, technological advancements, and financial markets, some crypto traders may prefer to focus on less tech-reliant projects, rather than investing in high-risk strategies that could be vulnerable to trade policy changes.
