The S&P 500 ended nearly flat on Friday, closing out a strong month of gains as investors looked past uncertainties surrounding trade policies. The broad index dipped slightly by 0.01% to finish at 5,911.69 points. The Dow Jones Industrial Average slid 0.32% to 19,113.77, while the Nasdaq Composite added 0.13% to close at 42,270.07.
May proved to be a notable month for the markets, with the S&P 500 gaining 6.2%, its best monthly performance since November 2023. The Nasdaq surged 9.6%, and the Dow saw a 3.9% increase. For the week, the S&P 500 jumped 1.9%, the Dow rose 1.6%, and the tech-heavy Nasdaq advanced 2%.
Stocks initially fell on Friday after President Donald Trump announced that China had violated its current trade agreement with the U.S. Reports later suggested that the administration plans to broaden restrictions on China’s tech sector. Treasury Secretary Bessent noted that U.S.-China trade talks were “a bit stalled,” adding to investor uncertainty. The Trump administration’s contentious plan for broad tariffs remains in legal limbo.
After the Court of International Trade questioned the legality of Trump’s tariffs, an appeals court temporarily allowed the duties to remain in place. This ongoing legal battle adds another layer of uncertainty to the market, worrying investors about potential recession risks tied to shifting trade policies.
Month of gains amid uncertainty
In terms of sector performance, health care was the only sector in the S&P 500 to experience a decline for the month, dropping 5.8%. This sector was heavily influenced by struggles from major companies, including Johnson & Johnson and Regeneron. In contrast, the information technology sector led the month’s gains, surging more than 10%, though remaining negative for the year.
The University of Michigan’s consumer sentiment survey showed a mixed outlook. The sentiment index was flat at 52.2, slightly better than mid-month but down 24.5% from a year ago. Optimism grew due to a temporary pause on some tariffs on Chinese goods, improving expected business conditions.
Notable market movers included Costco, which gained more than 3% after reporting better-than-expected earnings, and Ulta Beauty, whose shares soared nearly 13% to a 52-week high after raising its forecast and exceeding quarterly earnings expectations. Gap, on the other hand, saw its stock plunge 20% due to a poor sales outlook, despite beating first-quarter earnings and revenue estimates. Investors are navigating a challenging environment with mixed signals from trade policies and macroeconomic data.
Despite these hurdles, the S&P 500 closed out a strong month with significant gains, particularly in the technology sector. However, health care lagged, and legal uncertainties over tariffs continue to loom large.
