The S&P 500 ended slightly below its flatline on Friday. This concluded a remarkable month of gains amid ongoing trade policy confusion. The broad index inched down by 0.01% to close at 5,911.69.
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The Dow Jones Industrial Average (DJIA) slid 0.32% to 19,113.77. The Nasdaq Composite added 54.34 points, or 0.13%, finishing at 42,270.07. The trading session capped off a strong May for the major indices.
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The S&P 500 gained 6.2% this month. The Nasdaq surged 9.6%. This marked their best monthly performances since November 2023.
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The Dow also posted a 3.9% gain for the month. Week-over-week, the S&P 500 jumped 1.9%. The Dow rose 1.6%.
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The Nasdaq advanced 2% over the same period. The month saw a significant rally. This was partially spurred by hopes of potential trade agreements following a preliminary deal between the U.S. and U.K.
Despite initial losses on Friday, later reports suggested the administration plans to broaden restrictions on China’s tech sector.
Treasury Secretary Bessent admitted that U.S.-China trade talks are currently stalled. This added to the uncertainty in the market. Trade tensions have kept investors on their toes.
Legal concerns over tariffs added another layer of complexity.
Strong May despite trade uncertainties
The Court of International Trade recently challenged Trump’s tariff policies.
However, an appeals court allowed the duties to remain in place temporarily. Market observers remain cautious about the future of U.S. trade policies and their potential impact on the economy. “It’s an awkward time,” said Jay Hatfield, CEO of Infrastructure Capital Management.
“If you’re an investor, you want to bet on good earnings, not good tweets about tariffs.”
The health care sector was the only S&P 500 sector recording a decline for the month, dropping 5.8%. Major contributors to this decline included UnitedHealth and Regeneron Pharmaceuticals. UnitedHealth faced setbacks after suspending its annual forecast and CEO Andrew Witty’s departure.
Regeneron plunged 20% following mixed results from a late-stage trial for its respiratory drug itepekimab. Tech stocks, on the other hand, outperformed. The tech-heavy Nasdaq rallied over 9% in May.
Information technology stocks led the S&P 500 sectors, surging more than 10% for the month. Notable stock movements on Friday included a 13% rise in shares of Ulta Beauty after the company reported strong quarterly results and raised its outlook. Gap Inc., however, saw its shares plunge 20% due to a forecast of flat sales growth, despite beating earnings expectations for the first quarter.
The University of Michigan consumer sentiment survey indicated a slight uptick in optimism regarding the economic outlook. This was likely influenced by the recent trade policy developments. The survey showed a revised sentiment reading of 52.2, flat from April but an improvement from mid-month levels.
As the trading month concluded, investors continue to navigate an environment of heightened uncertainty due to trade policy tensions and legal battles over tariffs. Despite these challenges, the market has demonstrated resilience, with key indices posting substantial gains for May. For the week ahead, market participants will be closely watching developments in trade negotiations and economic data releases to gauge the potential direction of the market.