S&P 500 Index Rises for Five Straight Days: Eased US-China Trade Tensions and Corporate Mergers and Acquisitions Lift Market Sentiment

Taiwan • Business • 05/16 18:26
S&P 500 Index Rises for Five Straight Days: Eased US-China Trade Tensions and Corporate Mergers and Acquisitions Lift Market Sentiment

On May 16, 2025, the S&P 500 index of the U.S. stock market rose for the fifth consecutive trading day, with a total weekly gain of 4.5%. The rally was driven by a reduction in U.S.-China trade tensions, the merger between Charter and Cox, a depreciating dollar, moderate inflation figures, and expectations of a potential rate cut by the Federal Reserve. Investors moved funds back into riskier assets, and market sentiment warmed.

Key Updates

05/18 10:17

Key Drivers of U.S. Stock Market Trends This Week: Trump's Tariff Negotiations, Federal Reserve Policy, Economic Data, Computex Taipei, and Corporate Earnings

Last week, the major U.S. stock indices rebounded, with investors focusing on five key variables: the Trump administration's tariff policy and trade negotiations, the Federal Reserve's policy stance, U.S. economic data, technology information from the Taipei International Computer Show (COMPUTEX 2025), and corporate earnings, especially the growth expectations for tech stocks. These factors will influence the short-term trend of U.S. stocks.

05/17 22:17

Moody's downgrade of U.S. debt leads to an increase in yields, as Trump signs a $2 trillion deal during his Middle East trip, boosting AI and prompting a stock market rebound.

On May 16, 2025, Moody's downgraded the United States' sovereign credit rating from "Aaa" to "Aa1," leading the 10-year U.S. Treasury yield to rise to 4.49%, and U.S. stocks were under pressure after hours. President Trump visited the Middle East that same week, signing economic and arms deals exceeding $2 trillion with Saudi Arabia, the UAE, and Qatar, and facilitated cooperation on AI chips, which boosted tech stocks. Despite the short-term volatility caused by the downgrade, the market remained optimistic due to the strong performance of AI and tech stocks.

05/17 14:27

Lisa Shalett, Chief Investment Officer at Morgan Stanley, warns: The rebound in U.S. stocks might be coming to an end, suggesting a shift from technology stocks to the financial and healthcare sectors.

Morgan Stanley Wealth Management's Chief Investment Officer, Xia Leite, warns that the rebound in U.S. stocks is unlikely to be sustained. She advises investors to realize profits from tech stocks and shift towards industries such as finance, energy, and healthcare, which benefit from regulatory easing. She points out that there is a structural shift in the AI sector, with corporate revenues and free cash flows below expectations, constraining the market's upward potential. Xia Leite's view aligns with changes in market fund flows, indicating an increasing preference among investors for defensive and value-oriented assets.

05/16 22:55

U.S.-China Tariff Deal and Trump's Visit to the Middle East Boosts the Market: Tech Stocks Lead the Gains, All Three Major U.S. Stock Indices Rise

On May 16, 2025, the US stock market closed higher across the board due to a 90-day tariff suspension agreement reached between US-China and a $200 billion trade agreement as a result of President Trump's visit to the Middle East. The Dow Jones Industrial Average rose by 331 points, the S&P 500 Index closed in the green for the fifth consecutive day, and the Nasdaq Composite rose by nearly 100 points. Tech stocks led the rally, with Tesla and Nvidia stocks rising 17% and 16% respectively this week. However, the US consumer confidence index dropped to its second-lowest level on record, and inflation expectations hit their highest level since 1981, contributing to market uncertainty.

05/16 21:54

U.S. stocks have rebounded strongly this week: Outstanding corporate earnings, relief from U.S.-China tariffs, and diminished inflationary pressure

In the second week of May 2025, the U.S. stock market rebounded strongly, with the S&P 500 index rising nearly 5% for the week. Driving factors included corporate earnings exceeding expectations, a temporary pause in the US-China tariff war, inflation data indicating reduced pressures, and market expectations of a shift in Federal Reserve policies. However, the technology and semiconductor sectors performed weakly, reflecting the market's conflicting views on the AI boom versus the real economy.

05/16 18:26

S&P 500 Index Rises for Five Straight Days: Eased US-China Trade Tensions and Corporate Mergers and Acquisitions Lift Market Sentiment

On May 16, 2025, the S&P 500 index of the U.S. stock market rose for the fifth consecutive trading day, with a total weekly gain of 4.5%. The rally was driven by a reduction in U.S.-China trade tensions, the merger between Charter and Cox, a depreciating dollar, moderate inflation figures, and expectations of a potential rate cut by the Federal Reserve. Investors moved funds back into riskier assets, and market sentiment warmed.

05/16 09:54

U.S. stocks have risen for four straight days: Market sentiment has improved, but the Federal Reserve warns about the risks of supply shocks.

U.S. stocks continued to rise this week, with the S&P 500 index closing higher for four consecutive days. The Dow Jones index rose over 270 points on May 15, due to the easing of U.S.-China tariffs and improving economic data, which boosted market confidence. Federal Reserve Chairman Powell warned that supply shocks could become more frequent and persistent, highlighting that the market still faces risks. Issues such as supply chain bottlenecks, policy uncertainty, and weak consumer spending remain, urging investors to remain vigilant.

05/16 02:58

In April, the US Producer Price Index (PPI) saw its largest decline in five years, putting pressure on technology stocks, leading to mixed results in the US stock market; the Taiwan stock market closed at 21,730 points, as foreign investors have been net buyers for ten consecutive days.

The U.S. Producer Price Index (PPI) fell by 0.5% in April, marking the largest monthly drop in five years, mainly due to a decrease in service prices, indicating a reduction in inflationary pressures. Following the release of this data, the U.S. stock market showed mixed performance, as the Dow Jones and S&P 500 rose, while the Nasdaq and Philadelphia Semiconductor Index fell. On the 15th, Taiwan's weighted index closed down by 52.62 points to 21,730.25, as foreign investors net bought for the tenth consecutive day, with a single-day net purchase of NT$7.534 billion, accumulating over NT$200 billion in net purchases over ten days.

05/16 02:58

U.S. stock futures fluctuate in early morning trading: Dow drops slightly by 17 points, Nasdaq and S&P both retreat.

On May 16, 2025 (local time in Taipei), in early trading, U.S. stock futures were volatile. The Dow Jones Industrial Average futures stood at 42,368 points, down 17 points or 0.04%; the S&P 500 futures were at 5,925.25 points, down 8 points or 0.13%; and the Nasdaq 100 futures were at 21,361.75 points, down 38.5 points or 0.18%. This was in contrast to the rise seen at 08:31, when futures for the three major indices saw a slight uptick. After a mixed performance in the previous trading day, investor sentiment was cautious.

05/16 01:24

JPMorgan CEO Jamie Dimon, in Paris, warns about recession risks, and the uncertainty surrounding US-China trade negotiations is impacting US stock performance.

On May 15, 2025, JPMorgan Chase's CEO, Jamie Dimon, warned at the Global Markets Conference in Paris that despite the easing of US-China tariff tensions, global economic uncertainties and recession risks still exist. Progress in the US-China trade negotiations has been limited, and market sentiment is cautious. On that day, the performance of US stocks was mixed, with the Dow Jones Industrial Average rising 271 points, the S&P 500 closing higher for the fourth consecutive day, while the Nasdaq and the Philadelphia Semiconductor Index experienced slight declines.

US-China Trade Tensions Ease, Market Sentiment Warms

At the beginning of this week, the United States and China agreed to a 90-day suspension of tariffs, with both parties agreeing to significantly lower import tariffs on each other's goods. The US will lower the average tariff on Chinese goods from the original 145% to 30%, while China will reduce retaliatory tariffs on US goods from a maximum of 125% to 10%. Additionally, China suspended export control measures on 28 US companies and will engage in further consultations with the US during the APEC meeting in South Korea.

This series of measures is seen by the market as a significant easing of the trade war, encouraging investors to return to the stock market. According to Yahoo Finance, the S&P 500 index rose 0.1% intraday on Friday, marking the fifth consecutive day of gains and successfully erasing last month's losses.

Charter and Cox Merger Boosts Market Confidence

News of corporate mergers also fueled this week's stock market rise. US cable and broadband service provider Charter Communications announced it will acquire Cox Communications for $21.9 billion. The merged company will become the largest cable and broadband provider in the US, serving 38 million users, surpassing Comcast.

Charter's stock price jumped over 4% in early trading after the announcement. According to the company's statement, the merger is expected to generate $500 million in cost synergies within three years and strengthen its competitiveness in the broadband and mobile services market. This transaction is also seen as one of the largest mergers during the Trump administration and will undergo antitrust review by the US Department of Justice.

Moderate Inflation Data Alters Fed Policy Expectations

The latest US April inflation data shows the Consumer Price Index (CPI) increased by 2.3% year-on-year, the smallest rise since February 2021, while the Producer Price Index (PPI) unexpectedly fell by 0.5%. These figures indicate easing price pressures, further reinforcing market expectations of a potential rate cut by the Federal Reserve.

According to data compiled by E.SUN Bank, the yield on the US 10-year Treasury note fell by 10.46 basis points to 4.43% this week, reflecting heightened expectations of future monetary policy easing. The market widely anticipates the Fed will cut rates once in September and once in October.

Fed Chair Jerome Powell recently mentioned that the 2% average inflation target set in 2020 and the approach to addressing the employment gap will be re-evaluated, with a new policy framework to be announced in August. Fed Governor Barr warned that tariff-related supply chain disruptions could pose risks to economic growth and inflation.

Dollar Depreciates, Funds Return to Risk Assets

In the forex market, the dollar index depreciated for the second consecutive trading day this week, reporting at 100.64 on the 16th, down about 7% year-to-date. Safe-haven currencies such as the yen and Swiss franc appreciated. Strategists from JPMorgan and Deutsche Bank expect the dollar to weaken further, with bearish sentiment in the options market reaching the most pessimistic level in five years.

The dollar's depreciation helps boost US export competitiveness and lowers the price of dollar-denominated assets, attracting international funds back to US stocks. According to Bank of America data, US equity funds recorded a net inflow of $19.8 billion for the week ending May 14, marking the first fund replenishment in five weeks.

Investor Risk Appetite Increases, Tech Stocks Lead the Gains

Against the backdrop of rising risk appetite, tech stocks performed well. NVIDIA's stock price increased by over 1% this week, and TSMC's ADR also increased by 0.3%. According to Yahoo Finance, technology, consumer discretionary, and industrial sectors were the top three performing sectors this week.

Additionally, according to Bank of America strategist Michael Hartnett, investors' fear of missing out on the market rebound may prompt more funds to chase gains, further boosting stock market momentum.

References

People Also Ask...

faq

On the stock market, how much impact does the easing of trade tensions between the US and China have?

faq

How does the easing of US-China trade tensions affect the stock market?

faq

How does the easing of US-China trade tensions affect our community's economy?