U.S. stock markets appeared set to close the week on a positive note Friday, supported by easing tensions between the U.S. and China over tariffs. However, lackluster consumer sentiment figures kept investor enthusiasm restrained.
Markets pulled back slightly after the University of Michigan reported a deeper decline in its Consumer Sentiment Index for May, accompanied by a sharp rise in one-year inflation expectations, which jumped to 7.3% from 6.5% in April.
“We’re seeing a market caught in a tug-of-war between optimism driven by geopolitical relief and the sobering reality of persistent inflation,” noted Julia Hermann, a global markets strategist at New York Life Investments.
By late morning, the Dow Jones Industrial Average was up a modest 15.26 points (0.04%) to 42,338.01. The S&P 500 climbed 9.73 points (0.17%) to 5,926.74, and the Nasdaq Composite added 23.68 points (0.12%) to reach 19,135.99. All three indexes were on course for weekly gains, with the S&P 500 notching its fifth consecutive daily advance.
Earlier in the week, stocks had rebounded sharply after Washington and Beijing agreed to a 90-day ceasefire in their ongoing trade dispute, restoring a measure of investor confidence. That bounce pushed the S&P 500 back into positive territory for the year — its first such return since late February — although it still trails its record high by roughly 4%.
“The optimism around tariff relief is fueling hopes for stronger growth,” Hermann added. “But investors would be wise to treat this rebound as a window to brace for whatever challenges lie ahead.”
Adding to the international trade optimism, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a limited trade pact last week, signaling further easing of trade-related tensions.
Market participants were also eyeing upcoming remarks from Federal Reserve officials, including Richmond Fed President Thomas Barkin, for clues on the future path of interest rates.
Meanwhile, legislative uncertainty loomed in Washington, where House Budget Committee Chair Jodey Arrington warned that Friday's anticipated vote on a tax proposal could be postponed due to internal opposition.
Among individual stocks, performance was mixed across major tech names. Alphabet gained over 1%, while Meta Platforms slipped more than 1%. The broader tech sector remained a standout this week, with the S&P’s information technology sub-index poised to close up more than 7%.
In corporate news, Applied Materials saw its shares drop 6% after reporting weaker-than-expected second-quarter revenue. Charter Communications rose about 1%, pulling back from session highs, after revealing plans to acquire Cox Communications in a $21.9 billion deal.
On the New York Stock Exchange, advancing stocks outpaced decliners by a 1.49-to-1 margin, while on the Nasdaq, the ratio stood at 1.35-to-1. The S&P 500 logged 19 new 52-week highs, while the Nasdaq recorded 50 highs and 56 lows.