Why the Stock Market Rose in the Week of May 26, 2025

Stocks enjoyed a broad rally in the shortened trading week (Monday was Memorial Day), with all three major indexes finishing higher from Tuesday through Friday. In fact, the S&P 500 and Nasdaq wrapped up their biggest monthly gains since late 2023 as May came to a close. By Friday’s close, the S&P 500 was up roughly 1–2% on the week, the Nasdaq Composite climbed about 2%, and the Dow Jones Industrial Average gained on the order of 1.5–2%. The indexes managed these gains despite a late-week pullback, and they spent most days moving upward thanks to a steady stream of positive news.

Market Performance: Index Moves This Week

• Dow Jones Industrial Average: Rose about 1.5%–2% over the week, adding roughly 700 points. The blue-chip index closed Friday around 42,270, recouping losses from earlier in May. The rally was paced by individual gainers such as Boeing (which jumped on news of renewed China deliveries) and strong earnings from industrial names.

• S&P 500: Gained roughly 1½–2% on the week, ending near 5,900 by Friday. Tuesday’s jump of about 2.1% snapped a four-day losing streak, and the index finished the week back in modest positive territory for the year. Tech and consumer discretionary stocks led the S&P’s advance, helping to overcome late-week caution about tariffs and earnings.

• Nasdaq Composite: Climbed about 2% for the week. The tech-heavy index surged over 2% on Tuesday and managed smaller gains later in the week. High-flying tech names and semiconductor stocks propelled the Nasdaq, reflecting renewed enthusiasm for AI and big tech after recent turmoil.

All three benchmarks spent most of the week near their session highs. They started strong on Tuesday, held up over mid-week, and barely gave back ground on Friday, cementing their gains for the week.

What Drove the Rally

Several key factors combined to lift stocks last week:

• Tariff Truce and Trade News: President Trump delayed or paused some of his planned tariffs on European and Asian imports, which eased a major overhang from April. On Sunday night, he announced that the 50% tariffs on EU goods would be pushed back, and similar decisions were made on China. This trade-relief news stunned the market in a good way: investors cheered the softer approach after a sell-off on May 23 when Trump had threatened steep tariffs. The promise of fewer new tariffs took a big worry off the table and fueled Tuesday’s rally. (Later in the week, a U.S. appeals court temporarily reinstated the so‑called “Liberation Day” tariffs, and Trump issued new threats toward China, but by then, stocks had already climbed on the earlier good news.)

• Tech Stocks and AI Earnings: Investors piled back into technology, especially companies tied to artificial intelligence. Nvidia was the star of the show: after the market closed on Wednesday, it reported jaw-dropping results for its fiscal first quarter – revenue jumped about 69% year-over-year to roughly $44 billion as demand for AI chips stayed “incredibly strong,” according to its CEO. Though Nvidia’s stock dipped slightly on Wednesday (ahead of the release), it rocketed more than 3% higher on Thursday after-hours and helped lift the entire semiconductor sector. Other big tech names also climbed. Tesla jumped around 7% on Tuesday (its biggest one-day gain in months) on optimism about electric-vehicle demand. Broadcom, AMD, Microsoft, Amazon, Meta, and Alphabet all finished the week higher. In short, AI and tech hype returned, rekindling the late-April rally in the “Magnificent Seven” and chip stocks.

• Solid Economic Data: Under the hood, the economic news was generally supportive. Early data showed the U.S. manufacturing and services PMI readings jumped in May, beating estimates and suggesting economic activity was picking up after April’s dip. On Friday morning, new figures revealed that inflation was cooling: the Federal Reserve’s preferred gauge (the PCE price index) rose just around 2.1% year-over-year in April, down from 2.3% in March and below forecasts. Lower inflation eased worries about higher interest rates, and 10-year Treasury yields fell back from their mid-week highs. In short, growth signals and tame inflation reinforced the risk-on mood.

• Sector Highlights: The rally was broad. Semiconductors and AI plays surged, led by Nvidia, but so did consumer and travel stocks. Cruise lines (Carnival, Royal Caribbean) jumped about 6% on Tuesday on strong booking trends. Airlines (Southwest, United) rose over 5%. Boeing climbed more than 3% mid-week on the news that it would resume airplane deliveries to China next month. Retailers also had a banner week: Abercrombie & Fitch spiked ~15% after earnings, and Capri Holdings (Michael Kors, Jimmy Choo) popped ~10% on analyst upgrades. Even Bitcoin was buzzing — it hit an all-time high near $112,000 earlier in the week — and crypto-related stocks saw gains. The only major laggard was energy: oil prices slipped slightly, keeping many energy stocks flat.

• Investor Sentiment and Positioning: Coming into the week, sentiment was cautious after a volatile May. But the fresh positive headlines quickly flipped the mood. The relief on trade, the confirmed strength in earnings, and better economic data made many investors feel safer buying stocks. By Thursday, traders noted that Wall Street “appeared to shrug off” the tariff court fight, focusing instead on stocks’ forward momentum. The result: both the S&P 500 and Nasdaq notched their largest monthly gains since late 2023. In other words, bullish tech and growth trends took center stage, and investors seemed willing to overlook lingering trade uncertainty — at least for now.

In summary, the week of May 26 was marked by a welcome turn of events for the bulls. A surprise truce in trade policy, eye-popping earnings in tech, and encouraging data gave stocks a lift across the board. That combination of factors helped push the Dow, S&P 500, and Nasdaq into positive territory on the week and set the tone as Wall Street headed into June.