Wall Street ended the week on a strong note as investors continued to cheer easing US-China trade tensions and a resurgent tech sector. Stocks advanced for a fifth straight session, supported by optimism around the 90-day tariff truce and steady corporate momentum. Despite a sharp drop in consumer sentiment and renewed inflation concerns, traders looked through the noise, encouraged by signs of economic resilience. Tech stocks dominated the rally, while broader risk appetite improved across sectors. Markets closed before news emerged that Moody’s downgraded the US credit rating, a development that could shape sentiment heading into next week.

Key Takeaways:

  • Dow Rebounds Sharply to End Week in the Green: The Dow Jones Industrial Average climbed 331.99 points, or 0.78%, on Friday to close at 42,654.74. The blue-chip index gained 3.4% for the week, lifting it back into positive territory for 2025. 
  • S&P 500 Climbs for Fifth Straight Day, up 5.3% on Week: The S&P 500 advanced 0.70% to 5,958.38, locking in its fifth consecutive daily gain. For the week, the benchmark index surged 5.3% as investors welcomed a tariff truce between the US and China and shrugged off inflationary concerns. A broad tech rally led by Nvidia and Meta provided significant tailwinds.
  • Nasdaq Rallies as Tech Extends Weekly Surge: The Nasdaq Composite rose 0.52% to 19,211.10 on Friday and gained 7.2% for the week, its best since March. The index has now risen for five straight sessions, driven by optimism in tech earnings and tariff relief.
  • Europe Ends Higher on Tariff Relief and Earnings: European markets closed the week on a strong note as investor confidence improved following the US-China trade deal. The Stoxx 600 rose 0.4% on Friday and 2% for the week. Germany’s DAX added 0.30% (71.84 points), France’s CAC 40 rose 0.42%, and Italy’s FTSE MIB gained 0.59%. The FTSE 100 ended 1.52% higher at 8,684.56. German defence supplier Renk jumped 8% on a JPMorgan upgrade, while Novo Nordisk fell 1.8% amid concerns over its obesity drug leadership. Meanwhile, France’s unemployment held at 7.1% in Q1, and Italy’s April CPI was revised slightly lower to 2.0% YoY. 
  • Asia Mixed as Japan GDP Disappoints and Trade Talks Drag: Asia-Pacific markets finished the week mixed as Japan reported a sharper-than-expected 0.2% GDP contraction for Q1, missing estimates of -0.1%. The Nikkei 225 ended flat at 37,753.72, while the Topix inched up 0.05% to 2,740.45. Japan remains locked in inconclusive trade talks with the US, adding to policy uncertainty. Australia’s ASX 200 rose 0.56%, buoyed by gains in banks and miners. South Korea’s Kospi edged up 0.21%, though the Kosdaq fell 1.11%. Hong Kong’s Hang Seng dropped 0.43%, and China’s CSI 300 lost 0.46% to 3,889.09 as sentiment remained cautious ahead of more regional economic data. India’s Nifty 50 slipped 0.26%.
  • Oil Logs Weekly Gain Despite Supply Concerns: Oil prices climbed more than 1% on Friday, supported by easing US-China trade tensions. Brent crude rose 88 cents to $65.41, while WTI gained 87 cents to $62.49. Both benchmarks advanced over 2% for the week. Sentiment was boosted by optimism over global demand, but supply concerns linger as Iran may ramp up exports under a potential nuclear deal. The IEA lifted its 2025 supply forecast by 380,000 barrels per day, citing higher expected output from OPEC+ countries. Analysts at BMI forecast Brent to average $68 in 2025, down from 2024 levels, due to trade-related uncertainty.
  • Treasury Yields Slip on Inflation Concerns: The 10-year Treasury yield fell 1.2 basis points to 4.445% as investors digested a drop in consumer sentiment and rising inflation expectations. The 2-year yield rose slightly to 3.999%. The University of Michigan’s index fell to 50.8, its second-lowest ever, while 1-year inflation expectations spiked to 7.3%. The bond market remained volatile, with the 10-year briefly exceeding 4.5% earlier in the week.
  • Consumer Sentiment Hits Second-Lowest Level as Housing Slows: The University of Michigan’s consumer sentiment index dropped to 50.8 in May, down from 52.2 in April, marking its second-lowest reading ever. Inflation expectations for the year ahead surged to 7.3%, up sharply from 6.5%, amid tariff fears. Long-term expectations ticked up to 4.6%. The reading also reflected weakness in housing, as April single-family homebuilding declined 2.1% to a seasonally adjusted annual rate of 927,000 units. Higher mortgage rates and tariff-related material costs were cited as key headwinds.
  • Moody’s Downgrades US Credit Rating After 116 Years at Aaa: Moody’s Ratings downgraded the United States’ credit rating to Aa1 from Aaa, ending its status as the last major agency to assign the US a perfect score. The 116-year-old agency cited ballooning government debt and rising interest costs. While the downgrade may nudge Treasury yields higher at the margin, the US still holds the second-highest rating and markets took the news in stride. The move aligns Moody’s with S&P and Fitch, who issued similar downgrades in 2011 and 2023.

FX Today:

  • EUR/USD Slips Below 1.1200 as Bullish Momentum Stalls: EUR/USD closed at 1.1149 on Friday, falling 0.31% after hitting an intraday high of 1.1219. The pair extended its retreat from the May peak near 1.1600, with momentum fading after a strong April rally. Immediate support sits near the 50-day simple moving average at 1.1106, while the next major downside level rests at 1.1000. A deeper drop could see a test of the 100-day SMA near 1.0761. On the upside, resistance remains at 1.1220, followed by 1.1400. The broader trend is still positive, but short-term sentiment appears to be shifting.
  • GBP/USD Holds Above 1.3200 as Consolidation Continues: GBP/USD closed at 1.3276 on Friday, declining 0.21% after touching a session high of 1.3333. The pair has been trading in a narrow range since late April, following a strong run-up from March’s lows near 1.2600. Despite softer momentum, price remains above the 1.3200 zone, supported by the 50-day SMA at 1.3116. The 100-day and 200-day moving averages, now at 1.2803 and 1.2873, are both trending higher. Resistance continues to hold at 1.3350, with a break above potentially opening the door toward 1.3450 and fresh yearly highs.
  • USD/CHF Extends Recovery but Struggles Below Averages: USD/CHF rose 0.50% on Friday to settle at 0.8391, continuing its bounce from May’s low near 0.8100. The pair touched 0.8400 intraday but failed to push through that round number resistance. Despite recent gains, the broader structure remains bearish, with all major moving averages, 50-day at 0.8487, 100-day at 0.8764, and 200-day at 0.8715, still sloping downward. For a more sustained recovery, USD/CHF would need to reclaim the 0.8500 handle. Support is seen at 0.8300, followed by 0.8200. While the rebound has reduced immediate downside pressure, upside progress remains limited without a shift in technical posture.
  • USD/JPY Tests Resistance After Bouncing From 154.00: USD/JPY advanced 0.23% on Friday to end at 155.95, building on recent gains after a bounce from 154.00. The pair reached an intraday high of 156.15 but continues to struggle around the 156.00 resistance zone, which has capped upside attempts throughout May. The 50-day SMA at 153.88 provides nearby support, and the broader trend remains upward as long as the pair holds above 154.00. A breakout above 156.20 would open the path toward the April peak near 160.00. Until then, consolidation is likely, with key support and resistance levels well-defined for traders.
  • Gold Struggles Below $2,660 as Rally Takes a Breather: Gold closed at $2,657 on Friday, down 0.50% from the week’s high at $2,685, as the rally paused amid some profit-taking. Although the metal softened, the broader bullish trend remains in place, helped by ongoing geopolitical concerns and a softer US dollar. Initial support is forming at $2,650, with stronger demand expected near $2,600, a level aligned with the September 18 swing high. Below that, $2,546 and the 50-day SMA at $2,488 offer deeper support. Resistance is seen at $2,685 and then at the all-time highs around $2,730.

Market Movers:

  • Moderna and Eli Lilly Climb Over 5% in Pharma Bounce: Moderna (MRNA) and Eli Lilly (LLY) both jumped over 5%, contributing to broad gains in the pharmaceutical space. The rally reflected a rebound in sentiment following recent weakness, aided by easing rate fears and rotation back into healthcare stocks.
  • CoreWeave Soars After Nvidia Increases Stake: CoreWeave (CRWV) jumped more than 22% after a regulatory filing revealed that Nvidia had increased its ownership stake from 5.2% to 7%. 
  • Archer Aviation Jumps on LA Olympics Deal: Archer Aviation (ACHR) climbed over 9% after being named the “Official Air Taxi Provider” for the 2028 Los Angeles Olympic Games. 
  • Applied Materials Sinks on Revenue Miss: Applied Materials (AMAT) fell over 5%, leading declines on the Nasdaq and S&P 500, after reporting Q2 revenue, missing analyst expectations. 
  • Globant Craters on Weak Revenue and Forecast Cut: Globant SA (GLOB) plummeted more than 23% after reporting Q1 revenue of $611.1 million, well below the $621.1 million consensus. 
  • Doximity Tumbles After Disappointing 2026 Forecast: Doximity (DOCS) sank over 10% after issuing a 2026 revenue forecast of $619 million to $631 million, below Wall Street’s estimate. 

Equities wrapped up the week with solid momentum, driven by strength in technology shares and broad-based risk appetite. Investors largely brushed aside soft sentiment data and rising inflation expectations, choosing instead to focus on corporate resilience and market breadth. Healthcare and AI-related stocks saw renewed interest, adding depth to the rally. While the trading week ended on a high, after-hours news of Moody’s US credit downgrade introduces a new variable that may test investor confidence. With multiple macro and policy signals now in play, the path forward could hinge on how markets absorb this late-week shift in narrative.