Wall Street’s Rise Contributed to Strong May Index Performance
In hectic trading on Wall Street last week, the main indices rose sharply, achieving significant gains in May, and investors will now turn to macroeconomic data to be released in the coming days to see what impact the chaotic tariff policy of the U.S. president has had on the world’s largest economy.
On Wall Street last week, the Dow Jones rose 1.9 percent to 42,270 points, while the S&P 500 strengthened 1.9 percent to 5,911 points, and is now just four percent below its record level reached on February 19. At the same time, the Nasdaq index rose two percent to 19,113 points.
Last week’s gains were primarily due to a surge in stock prices at the beginning of the week on the wings of increased investor risk appetite following U.S. President Donald Trump’s decision to postpone the introduction of 50 percent tariffs on European exports. Trump thus backed down from his threat of 50 percent tariffs against the European Union starting June 1, postponing their implementation to July 9 to allow for negotiations between the White House and the EU bloc.
However, by Wednesday, the indices fell after it was announced that the U.S. administration ordered companies that produce software for designing chips to stop selling their services to Chinese companies, and they soared again on Thursday after a U.S. federal court blocked the implementation of Trump’s “Tariff Liberation Day,” which again spurred investment in riskier assets like stocks. On Friday, trading was cautious after Trump stated on social media that China had “violated” the trade agreement with the U.S.
Such trading in stocks last week is merely a reflection of the continued large oscillations in investor sentiment during May, which was very volatile for global stock markets due to Trump’s chaotic trade policies. Ultimately, his ‘softer’ approach to tariffs, along with better-than-expected corporate earnings and subdued inflation, helped the S&P recover after losses in April.
The S&P index indeed strengthened by 6.2 percent in May, while the Nasdaq jumped by 9.6 percent, making both indices achieve their best monthly performance since November 2023. The Dow strengthened on a monthly basis by 3.9 percent.
Trump’s trade wars have been shaking global markets for weeks due to concerns about economic consequences. For new guidance, investors will now turn to macroeconomic indicators to be released next week, primarily regarding employment in the U.S.
– Now that we have recovered and are again close to records, I think macroeconomic data must be better than expected for us to be able to advance from these levels – believes Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
The employment report for May is expected to show an increase of 130,000 jobs, according to a Reuters survey of economists, which would, however, be lower than 177,000 in the previous month.
And on European exchanges, stock prices also rose last week. The London FTSE index strengthened by 0.63 percent to 8,772 points, the Frankfurt DAX by 1.56 percent to 23,997 points, and the Paris CAC by 0.23 percent to 7,751 points.
