Investor sentiment has notably improved on signs that global trade tensions may be stabilizing, at least in the short term. The S&P 500 is up 4.5% for the week, with the Nasdaq Composite surging more than 6%. The Dow has also gained 2.6%. Thursday’s gains came despite mixed earnings reports and ongoing concerns around tariff-driven cost pressures.
Cooling Inflation Offers Additional Support
Markets also reacted positively to inflation data that showed continued softening in price pressures. Wholesale prices declined 0.5% in April, following a consumer price index reading earlier in the week that showed a 2.3% annual increase—its lowest rate since February 2021.
These figures have bolstered hopes that inflation may be easing without further monetary tightening, a key consideration for equity bulls positioning ahead of next month’s Fed meeting.
Corporate Warnings Highlight Tariff Risks
Despite the short-term optimism, not all market signals are reassuring. Walmart warned it could raise prices later this month due to tariff-related costs, suggesting that underlying pressures from the U.S.-China standoff remain.
According to Ritholtz Wealth Management’s Callie Cox, “There is an undercurrent of anxiety,” even if markets are temporarily overlooking such risks in favor of a tech-led rally. These lingering concerns could weigh on sentiment if further corporate warnings emerge.