U.S. stocks closed on a mixed note Friday after bouncing back from early losses, capping off a volatile yet strong month of May. The S&P 500 finished nearly flat for the day but recorded a robust 6% gain for May, marking its best performance in the month since 1990.
The Dow Jones Industrial Average edged up 0.13% on Friday, while the tech-heavy Nasdaq Composite slipped 0.3%, recovering from a session low of more than 1.6%. For the month, however, the Nasdaq surged nearly 10%, propelled by strong momentum in technology stocks. The Dow also posted a solid 4% gain over May.
Friday’s subdued trading followed news of expanding U.S. technology export restrictions on China and renewed trade tensions between the two nations. According to Bloomberg, the Trump administration plans to tighten export controls targeting subsidiaries of companies already listed on the Entity List, a move expected to affect numerous Chinese firms.
Adding to tensions, former President Donald Trump publicly accused China on social media of violating the existing trade deal, intensifying uncertainty. Treasury Secretary Scott Bessent described ongoing trade talks with China as “stalled” and suggested that a direct call between Trump and Chinese President Xi Jinping may be necessary to move negotiations forward.
Investor nerves were further tested by legal developments around tariffs. A U.S. appeals court temporarily reinstated Trump-era tariffs that a trade court had previously struck down, maintaining pressure on companies and supply chains. The administration is also reportedly considering imposing a 15% duty for up to 150 days under the Trade Act of 1974, heightening trade policy uncertainty.
Despite these geopolitical and legal headwinds, markets found reasons for optimism in easing inflation data. The Federal Reserve’s preferred inflation measure, the core Personal Consumption Expenditures (PCE) index, rose in line with expectations for April, helping to ease fears of more aggressive interest rate hikes.
Sector-wise, health care was the only S&P 500 group to finish May with a loss, down nearly 6%. All other major sectors closed the month higher, supported by cooling inflation and the strong performance of technology companies.
As markets head into June, the gains accumulated in May remain intact. However, ongoing trade policy risks and geopolitical uncertainty continue to loom large, suggesting volatility may persist.
