May 29, 2025

The Pulse: Global Economic and Market News for Thursday, May 29, 2025

U.S. and global markets rallied on May 29, 2025, as investors cheered a major U.S. court decision that blocked most of President Donald Trump’s recent import tariffs, easing trade tensions and boosting risk appetite. Strong earnings from Nvidia and other technology leaders further fueled gains, even as new data confirmed a contraction in the U.S. economy for the first quarter. The Federal Reserve’s latest meeting minutes and ongoing policy debates continued to shape expectations for interest rates and economic growth.

Market Performance and Drivers

• The S&P 500 and Dow Jones Industrial Average showed promising gains of about 1% and 1.2% for the week, respectively, while the Nasdaq Composite rallied more than 2%. The tech sector, led by Nvidia's impressive 5% jump after its CEO reassured investors about sustained AI demand and robust data center growth despite China-related headwinds, was a major contributor to this positive momentum.

• The positive momentum was not limited to the U.S. market. It was a global rally in equities, a drop in Treasury yields, and a weaker U.S. dollar that followed the U.S. trade court ruling. This surprise decision, which declared most of President Trump's recent tariffs unauthorized and stated that only Congress has the authority to regulate international trade, had far-reaching effects.

• Despite the ongoing political and trade-related uncertainty, tech giants like Apple, Meta Platforms, and Alphabet all posted gains of over 2%. This is a testament to the resilience of these companies and the strength of investor optimism around AI and technology. Salesforce also rose after raising its annual revenue and profit guidance, further reinforcing this positive outlook.

• Asia-Pacific markets climbed after the U.S. court ruling, and South Korea’s central bank cut its policy rate by 25 basis points to 2.5% to support growth amid ongoing political and trade-related uncertainty.

Economic Data and Policy Outlook

• The U.S. economy contracted at a 0.3% annual rate in the first quarter of 2025, according to the latest GDP data. The downturn was driven by a sharp increase in imports and a slowdown in consumer spending, partially offset by gains in investment and exports.

• The Federal Reserve’s May meeting minutes, released Wednesday, highlighted growing concerns about stagflation risks as tariffs drive up prices while economic growth slows. Policymakers maintained rates at 4.25–4.5% and signaled a “wait-and-see” approach, citing the dual challenges of persistent inflation and rising unemployment.

• The Fed also warned that ongoing tariff uncertainty could undermine the U.S. dollar’s status as a global haven and further dampen investor confidence.

Sector and Corporate Highlights

• Nvidia’s strong earnings and upbeat outlook sparked a rally in semiconductor and AI-related stocks. The company’s data center revenue grew 73% year-over-year, and management projected continued “exponential growth” in AI computing.

• Utilities and consumer discretionary stocks lagged, with Edison International and Carnival Corporation both down more than 2%. This was largely due to sector rotation, where investors were shifting their investments from one sector to another, and profit-taking, where investors were selling their stocks to lock in profits from recent gains.

• HP Inc. shares fell 8.5% after the company lowered its annual profit forecast.

Global and Trade Developments

• The U.S. energy sector is on track to generate more electricity from renewables than fossil fuels for a third straight month—a record streak.

• NATO is preparing to request additional troop commitments from Germany, reflecting heightened geopolitical tensions.

• The Bank of Korea’s rate cut underscores the impact of global trade and political uncertainty on monetary policy in Asia. The ongoing trade tensions and geopolitical uncertainties, particularly those involving North Korea, are forcing central banks in the region to adopt accommodative monetary policies to support growth.

Outlook

• Investors are now betting the Fed will cut rates twice before year-end, as bond yields dropped on expectations of easier monetary policy.

• Markets will be closely watching the release of the second estimate of Q1 GDP and the Fed’s preferred inflation metric (PCE) for further signals on the economic trajectory.

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 29, 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 29, 2025

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