U.S. Stock Market Summary for Monday, May 12, 2025

Major Indices

• S&P 500: +3.26% to 5,844.19
• Dow Jones Industrial Average: +2.81% to 42,410.10
• Nasdaq 100: +4.02% to 20,868.15
• Russell 2000: +3.42% to 2,092.20

Market Overview

U.S. stocks rallied sharply on Monday as investors welcomed a breakthrough in U.S.-China trade negotiations. Both nations agreed over the weekend to temporarily lower tariffs on a wide range of goods, easing fears that the ongoing trade war might tip the global economy into recession. Treasury Secretary Scott Bessent confirmed the agreement, stating that tariffs on most Chinese imports would be cut from 145% to 30% by May 14, while China reciprocated by reducing its tariffs on U.S. goods from 125% to 10%. President Trump also announced that China had agreed to remove non-tariff barriers on American products.

The broad-based rally pushed all major indices higher, with the Nasdaq 100 leading the gains, fueled by a sharp rebound in large-cap technology stocks. The S&P 500 also surged past its 200-day moving average, a key technical milestone that bolstered investor confidence. Risk appetite improved as markets priced in a lower probability of recession, lifting equities to their highest levels since early April.

Sector Highlights

• Technology & Consumer Stocks: Large-cap tech names powered the Nasdaq 100's 4% jump, marking a return to bull market territory after a sharp correction last month. Consumer-facing stocks with significant exposure to China, such as Nike (+7.3%) and Estée Lauder (+7.2%), also posted strong gains.
• Healthcare: Despite the overall market strength, healthcare stocks lagged following President Trump’s executive order aimed at reducing drug prices. However, the sector managed to avoid deeper losses as investors viewed the announced measures as less severe than initially feared.
• Cryptocurrency-Linked Stocks: Coinbase shares surged after the company announced it would join the S&P 500 index on May 19.

Economic Snapshot

• Treasury Yields: The 2-year U.S. Treasury yield rose 11 basis points to approximately 4.00%, reflecting reduced demand for safe-haven assets amid the equity market rally.
• Upcoming Inflation Data: Market participants are now focusing on the April Consumer Price Index (CPI) report scheduled for release on Tuesday, which could shape future monetary policy expectations.

Expert Commentary

Jeff Buchbinder of LPL Financial noted, "No one expected tariffs to come down this much. This is a major positive surprise."
Carol Schleif of BMO Private Wealth added, "The sharp drop in tariffs and the commitment to continue discussions are exactly what the market needed."
Matt Maley of Miller Tabak cautioned, "While this is clearly good news, the key question is whether it will be enough to significantly boost corporate earnings."
Jamie Cox of Harris Financial warned, "A meaningful agreement still faces several hurdles."

Government & Political Notes

President Trump signed an executive order mandating pharmaceutical companies to lower drug prices, aligning costs with international benchmarks. While aimed at making healthcare more affordable, the move has raised concerns over its potential impact on pharmaceutical innovation and profitability.

Conclusion

U.S. markets posted their strongest session in weeks, driven by optimism over easing trade tensions with China. While the rally reflects renewed confidence in the economic outlook, upcoming inflation data and policy developments remain critical to sustaining momentum. Investors will continue to watch for concrete progress in U.S.-China trade talks and the Federal Reserve’s response to evolving economic conditions.