Tariff delay lifts sentiment as focus shifts to inflation and tech earnings. Markets opened the week on firmer footing following a series of developments that eased near-term concerns and improved investor sentiment heading into a busy few days of economic data and corporate results.

Last Week in Brief

After several consecutive sessions of risk aversion, U.S. equities ended the previous week in retreat, with the S&P 500 and Nasdaq both down approximately 2.5%. The primary drivers were a surge in Treasury yields — with the 10-year touching 4.51% — and renewed fiscal anxiety following Moody’s downgrade of the U.S. credit rating. Technology stocks underperformed sharply, weighed down by tariff threats and valuation pressure.

What Changed Over the Weekend

Several market-moving headlines emerged ahead of Monday’s open:

• Tariff Delay: President Trump announced a postponement of the 50% tariff on EU imports until July 9, offering markets a temporary reprieve from escalating trade tensions.
• Improved Tone on U.S.–China: Quiet signals from both Washington and Beijing suggested backchannel progress in maintaining the 90-day tariff truce agreed earlier in May.
• Cooling Yields: U.S. 10-year Treasury yields pulled back slightly to 4.44%, relieving pressure on equity valuations and rate-sensitive sectors.

These developments combined to lift equity futures and support a risk-on tone as the week began.

Early Week Market Reaction (May 27, 2025)

• Dow Jones: +615 points
• S&P 500: +1.3%
• Nasdaq Composite: +1.8%

Technology stocks led the rebound, with strong opening moves in Tesla, Nvidia, and Amazon, while financials and consumer discretionary sectors also saw notable gains.

Key Focus Areas This Week

PCE Inflation Data – Friday

The Federal Reserve’s preferred inflation gauge will be the most closely watched economic release this week. A softer-than-expected print would reinforce the case for maintaining current policy rates into Q3.

Fed Speeches – Throughout the Week

Remarks from key Fed officials, including Michelle Bowman and John Williams, could further shape market expectations around interest rate path and the central bank’s inflation outlook.

Earnings – Nvidia, Salesforce, Dell

Tech remains in the spotlight. Nvidia’s Wednesday earnings will offer insight into AI infrastructure demand, while Salesforce and Dell provide a read on enterprise and hardware cycles.

Consumer Confidence – Tuesday

The Conference Board’s latest consumer sentiment index could signal whether inflation concerns are continuing to weigh on households.

Outlook

While the relief rally at the start of the week is encouraging, investors remain cautious. Markets are still navigating a fragile balance between inflation control, fiscal credibility, and global trade risk. Any upside surprise in inflation data or aggressive commentary from the Fed could quickly unwind early gains.

That said, with valuations off recent highs and key policy risks temporarily delayed, there is room for near-term optimism — especially if earnings deliver and macro signals remain stable.

Financy Team

May 27, 2025