According to Zhitong Finance APP, all three major U.S. stock indices closed higher last week, with the Dow Jones Industrial Average and the S&amp;P 500 rising by 3.4% and 5.3%, respectively, while the Nasdaq Composite surged by 7.2%. The S&amp;P 500 and Nasdaq have now recovered from the sell-off triggered by the Trump administration's tariff policies in early April, achieving gains so far this year.
Tariff news will remain a focus in the coming week. Economic data is expected to be relatively light, with manufacturing activity data and weekly initial jobless claims being the main highlights this week. Most companies have completed their first-quarter earnings reports, with earnings reports from Palo Alto Networks (PANW.US), Target (TGT.US), Home Depot (HD.US), and Workday (WDAY.US) drawing attention.
Tariff news remains the market focus
The core story in the market remains Trump's trade war. Last week, news of a potential 90-day tariff suspension between the U.S. and China drove the stock market significantly higher and prompted several Wall Street strategists to become more optimistic about the S&amp;P 500 outlook.
Trump stated last Friday that the U.S. would set tariff rates for its trading partners in the coming weeks. Fundstrat's research director Tom Lee defended his year-end S&amp;P 500 target of 6,500 in a client report, stating, &#34;If a tariff agreement is reached soon, the stock market will rebound further.&#34;
However, strategists also pointed out that most tariffs are currently only in a suspended state, and negotiations for a formal agreement are still ongoing. This leaves policy uncertainty persisting in the market. Victoria Fernandez, chief market strategist at Crossmark Global Investments, stated, &#34;I think we still need to maintain a certain level of caution until we reach a more solid agreement with China and even Europe.&#34;
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250519/1747616325564678.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="11.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250519/1747616325564678.png"/>
Federal Reserve in wait-and-see mode
Many economists have noted that the significantly reduced risk of economic recession due to the tariff suspension last week has also influenced market expectations for the Federal Reserve's policy this year. According to the CME FedWatch tool, market bets on the Fed's next rate cut have shifted from June to July. The data indicates that the market currently expects only two rate cuts of 25 basis points each throughout 2025, down from the previous week's expectation of three.
With a lack of new key economic data this week, market focus will shift to speeches from nine Federal Reserve officials. However, Bank of America economist Aditya Bhave does not believe investors will gain much insight into the Fed's new stance from these speeches. Aditya Bhave stated, &#34;We expect the tone of the Fed officials' speeches will not change significantly, with most emphasizing patience and pointing out the importance of assessing various policies comprehensively (not just tariffs) in light of future uncertainties.&#34;
Aditya Bhave's prediction differs from the market consensus; he believes that the Federal Reserve will not cut interest rates in 2025. He pointed out, &#34;Unless we see a significant deterioration in the labor market or a noticeable slowdown in inflation after the tariff effects fade, the Federal Reserve will not cut rates. Currently, both scenarios are unlikely to happen soon.&#34;
At present, although the expectations for interest rate cuts have been postponed, investors are still actively investing in risk assets due to increased optimism about the U.S. economic growth outlook, and the market remains strong.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250519/1747616321689308.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="12.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250519/1747616321689308.png"/>
&#34;Lag 7&#34;
Over the past two years, the &#34;Magnificent Seven&#34; of U.S. stocks has driven the S&amp;P 500 to achieve annual gains of over 20% consecutively, but by 2025, this combination has begun to drag down the market. Research released last Friday by Nicholas Colas, co-founder of DataTrek, shows that Apple (AAPL.US), Alphabet (GOOGL.US), Microsoft (MSFT.US), Amazon (AMZN.US), Meta (META.US), Tesla (TSLA.US), and Nvidia (NVDA.US) are the sole reasons for the decline of the S&amp;P 500 index in the first quarter. In fact, if these seven companies are excluded, the S&amp;P 500 would have risen by 2% this year.
However, the recent trend is changing. Since early May, 60% of the gains in the S&amp;P 500 index have come from large tech stocks, with strong increases in Microsoft and Tesla being the main drivers. Over the past month, both Tesla and Nvidia have risen by over 30%, while Microsoft has also increased by about 20%.
David Kostin, Goldman Sachs' head of U.S. equity strategy, raised his year-end target for the S&amp;P 500 from 5,900 to 6,100 after the suspension of U.S.-China tariffs, stating that following strong earnings reports from tech stocks in the first quarter, another round of tech stock gains may be on the horizon. David Kostin said, &#34;We expect that, against the backdrop of moderate economic growth, the long-term profit growth characteristics exhibited by many AI-related stocks will attract investors, especially considering their current valuations are relatively not high.&#34;
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250519/1747616315974313.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="13.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250519/1747616315974313.png"/>

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The US stock market may experience a quiet week, with tariff news continuing to dominate market sentiment. Last week, all three major indices closed higher, with the S&P 500 and Nasdaq recovering from the sell-off triggered by the Trump administration's tariff policies. In the coming week, manufacturing activity data and initial jobless claims data will be the main highlights. Although a tariff agreement has not yet been reached, the outlook for the S&P 500 has become optimistic, but policy uncertainty still exists

- The U.S. stock market saw gains last week, with the Dow Jones and S&P 500 rising 3.4% and 5.3%, respectively, while the Nasdaq increased by 7.2%.  
- Trade tensions, particularly regarding tariffs, remain a central focus, with expectations of a potential agreement influencing market optimism.  
- Despite a delay in interest rate cuts, investor sentiment remains strong, driven by positive economic outlooks and significant gains in major tech stocks.

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The US stock market may see a quiet week as tariff news continues to dominate market sentiment