Weekly update: trade negotiations, inflation relaxation

Hope you are doing well. Last week brought a temporary U.S.-China tariff cut and softer-than-expected monthly inflation data, making it an opportune time to share an overview of what happened and what’s ahead. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

• The S&P 500 rose by 5.27%. 
• The Nasdaq 100 surged by 6.81%.
• The Dow Jones Industrial Average was higher by 3.41%.

U.S.-China Tariff Cuts

It was a big day last Monday for U.S. stocks, with developments in U.S.-China trade relations. The announcement of a temporary tariff cut paved the way for the biggest day of gains for major U.S. stock indexes last week on Monday. Effective May 14th, both the U.S. and China reduced tariffs on each other, resulting in U.S. tariffs on Chinese imports coming down to 30% and Chinese tariffs on U.S. goods coming down to 15%. According to some media outlets, price hike risks for consumers remain, and the U.S. consumer expects inflation to spike by 7.3% by year-end, according to data from the University of Michigan.

Inflation Relaxation

Consumer expectations aside, consumer inflation showed signs of relaxation in April. April Consumer Price Index data showed a 0.2% monthly increase, resulting in a 12-month inflation rate of 2.3%, below expectations and the lowest reading since February 2021. Once again, shelter was the main component pushing the monthly consumer inflation metric higher. Data showed a rise in shelter pricing of 0.3% for the month, which accounted for more than half of the overall move in CPI. Wholesale pricing (PPI) also fell in April, declining to 2.4% versus 2.5% expected.

Bullish Reversal?

Bear market? Bull market? With so much happening in 2025, where do we stand? As of last Monday, as markets reacted to trade and tariff developments, the Nasdaq 100 closed the session better than 20% higher than its recent low made on April 8th. One definition of a bull market is a rise of greater than 20% off a recent low. NVIDIA and Tesla have been drivers of the recent tech rally. While nobody knows what will happen next with any degree of certainty, we do know that volatility has normalized from April levels, and the markets reacted very positively to the progress on tariffs.

The Week Ahead

It’s a quiet start to the week, economic data-wise. But this Thursday, we get some fresh Gross Domestic Product data and Fed meeting minutes from the last policy meeting. We also get another fresh look at inflation on Friday via the Fed’s preferred inflation gauge, Core Personal Consumption Expenditures. It is a full trading week, with the U.S. equity markets closed next Monday, 05/26, in observance of Memorial Day. That’s it for this week’s update! If you’d like to delve into these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out. I am always here as a resource for you.