May 22, 2025

The Pulse: Global Economic and Market News for Thursday, May 22, 2025

Despite a volatile session marked by concerns over the nation’s debt burden, the passage of President Trump’s major tax-and-spending bill in the House, and signs of rising inflation due to tariffs, the U.S. stock markets showed resilience and ended flat on May 22, 2025. Treasury yields eased from recent highs, helping equities recover from early declines, while economic data showed a modest rebound in business activity but ongoing labor market weakness.

Market Performance and Fiscal Policy

• The Dow Jones Industrial Average rose 0.2%, bouncing back from a nearly 2% drop the previous day. The S&P 500 finished marginally higher, while the Nasdaq Composite advanced 0.7%.

• The House of Representatives narrowly approved President Trump’s expansive tax-and-spending bill after last-minute amendments, including a more generous deduction for state and local taxes (SALT), helped secure enough votes. The bill, if enacted, is projected to add $3.8 trillion to the U.S. debt over the next decade, bringing the total above $36 trillion.

• Wall Street remains anxious about the long-term fiscal impact, especially after Moody’s recent downgrade of the U.S. credit rating. Treasury yields, which rose sharply earlier in the week, eased slightly, with the 10-year note falling to around 4.55%.

Economic Data and Inflation

Positive news emerged from S&P Global’s preliminary U.S. composite PMI for May, which rose to 52.1 from 50.6 in April, signaling a modest rebound in business activity. The services sector led the improvement while manufacturing output also returned to growth.

• Despite the uptick in activity, prices charged for goods and services spiked faster since August 2022 as companies passed on higher costs from tariffs. The PMI survey highlighted that supply chain delays and input shortages are becoming more prevalent, and inventory accumulation reached a record high as firms prepared for future tariff hikes.

• The labor market showed signs of strain, with weekly jobless claims rising and 1.9 million Americans filing for unemployment insurance continuously—the highest four-week average since November 2021.

Sector and Corporate Highlights

• Technology stocks outperformed, helping lift the Nasdaq, while solar and clean energy stocks fell sharply after the tax plan accelerated the phaseout of clean energy tax credits, leading to a decrease in investor confidence and a sell-off in these sectors.

• Bitcoin and Ether reached new highs as some investors sought alternatives to fiat currencies in response to rising U.S. deficits and debt.

Global and Trade Developments

• The 90-day pause on additional tariffs, a result of ongoing trade negotiations, continues to support business confidence. However, the PMI survey noted that exports of both goods and services fell for a second straight month in May, indicating the lingering uncertainty in the global trade environment.

• The European Commission lowered its eurozone growth forecast for 2025, citing global trade uncertainty, the impact of U.S. fiscal policy, and the ongoing challenges in the eurozone economy.

Disclosure

This article is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any securities. All information is based on publicly available sources as of May 22, 2025. The author holds no positions in the securities mentioned. Readers should consult financial professionals before making investment decisions.

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The Pulse: Global Economic and Market News for Thursday, May 22, 2025

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