Wall Street’s comeback: Tech leads the charge as trade truce and cooling inflation lift spirits

2 minutes read

14 May 2025

Wall Street’s comeback: Tech leads the charge as trade truce and cooling inflation lift spirits

It’s been a turbulent year for Wall Street. Investors have weathered wild swings, braced for recession talk, and watched as the S&P 500 dipped more than 17% at its lowest point. But this week, the mood shifted. On Tuesday, the US stock market staged a powerful rally, led by technology giants, as two pieces of good news arrived in quick succession: a truce in the US-China tariff war and the lowest inflation reading in over four years. Suddenly, the gloom that had hung over trading floors began to lift.

Tech stocks ignite optimism

The day belonged to technology. The Nasdaq Composite soared 1.61%, notching its fifth straight day of gains and officially entering a new bull market. Nvidia, the chipmaker at the heart of the artificial intelligence boom, jumped 5.6% after announcing a major deal to supply 18,000 top AI chips to Saudi Arabia. That single surge pushed its market value back above $3 trillion. The ripple effect was immediate-Broadcom and AMD both rallied, while Tesla and Meta added to the momentum9.

Lale Akoner, a global market analyst at eToro, summed up the mood: “There’s a significant risk-on sentiment right now. … Although the underlying issues between the US and China are still unresolved, it’s evident that neither side is inclined to escalate trade tensions”.

The S&P 500 rose 0.72% to close at 5,886.55, clawing back into positive territory for the year. Even as the Dow Jones lagged-dragged down by a sharp 18% drop in UnitedHealth shares after a surprise CEO departure-the broader mood was upbeat.

Trade truce and inflation data ease nerves

The catalyst for the day’s rally was clear. After months of tension, the US and China agreed to pause and reduce tariffs for 90 days, aiming for a broader deal. This move eased fears that a full-blown trade war could tip the global economy into recession.

“Markets hate uncertainty. With the tariff pause, there’s at least a window for cooler heads to prevail,” explained Michael Grant, chief market strategist at Goldman Sachs. “It’s not a permanent fix, but it’s a welcome relief.”

Adding to the optimism, April’s Consumer Price Index rose just 2.3% year-on-year-below the expected 2.4%. That’s the lowest annual inflation since 2021, reducing pressure on the Federal Reserve to keep interest rates high. With rate hikes less likely, growth stocks-especially tech-found fresh buyers.

Sector performance told the story: technology and information technology led the S&P 500, up 15.78% and 10.37% respectively for the year. Consumer discretionary and real estate followed, while health care and utilities lagged.

Yet, not all was rosy. UnitedHealth’s plunge weighed on the Dow, and healthcare stocks broadly struggled. Still, the overall tone was one of cautious optimism. Top stock market movers on May 14, 2025, showing top gainers like Nvidia, First Solar, and Tesla, and top losers including UnitedHealth, Merck, and Dollar Tree

Looking ahead, analysts are raising their forecasts. Goldman Sachs now sees the S&P 500 reaching 6,100 by year-end, while Yardeni Research projects 6,500, citing the fading risk of a major slowdown.

As Wall Street digests these developments, the mood is best summed up by Akoner: “There’s a significant risk-on sentiment right now”.

The next few weeks will test whether this optimism holds, but for now, Wall Street is breathing easier.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.