Wall Street closed in positive territory on May 29, 2025, capping off a strong week for equities across the board. The gains were driven by a blend of favorable legal developments, strong earnings reports from market heavyweights like Nvidia and Salesforce, and a tempered economic outlook that left investors cautiously optimistic.
Index Performance: Broad Gains with a Side of Caution
All four major U.S. indices advanced on Wednesday, continuing their recent upward trend:
- S&P 500: Gained 0.4%, closing at 5,912.17 SPY–0.04%
- Dow Jones Industrial Average: Rose 0.3%, ending at 42,215.73 DIA+0.54%
- Nasdaq Composite: Climbed 0.4% to 19,175.87 COMP+2.92%
- Russell 2000: Up 0.3%, finishing at 2,074.78 RUT–
These moves, while modest, reflect steady investor confidence in the face of political and macroeconomic headwinds. Notably, the S&P 500 and Nasdaq posted their seventh straight day of gains, a sign that bullish momentum may be outweighing short-term risks – for now.
Legal Headlines: Trump’s Tariffs Face Pushback
One of the day’s most market-moving headlines was the federal court ruling against most of former President Donald Trump’s so-called “Liberation Day” tariffs. The court stated that Trump overstepped executive authority, blocking the bulk of the proposed trade measures. For investors who had feared another round of inflationary trade war dynamics, this was a welcome development.
The relief, however, may be temporary. The White House confirmed it will appeal the decision, introducing a new layer of legal uncertainty. Markets responded positively in the short term, but traders are bracing for volatility as this case works its way through the courts.
The outcome of the appeal will carry significant weight for sectors sensitive to international trade, including technology, automotive, and consumer goods. If the appeal fails, it could provide longer-term relief to global supply chains. But if Trump’s team prevails, renewed tariffs could bring inflationary pressure and investor jitters back into the spotlight.
Earnings Recap: Nvidia and Salesforce Lift the Tape
Corporate earnings continued to show resilience, with Nvidia NVDA+0.89% and Salesforce CRM+0.90% delivering strong results that exceeded analyst expectations.
Nvidia reported a 69% year-over-year jump in revenue, driven by its booming AI chip business. Despite acknowledging an $8 billion revenue risk tied to new export restrictions to China, Nvidia shares rose 5%, reflecting investor confidence in the company’s dominant position in the global AI race.
Meanwhile, Salesforce beat expectations with adjusted EPS of $2.58 and quarterly revenue of $9.83 billion. The company raised its full-year outlook, citing continued demand for its AI-powered enterprise solutions.
These two tech giants helped buoy the Nasdaq and reinforced the narrative that AI remains one of the strongest secular growth themes in the current market.
However, not all earnings news was positive.
Best Buy BBY+0.68% saw its stock drop 7.5% after lowering its annual forecast. The company cited macroeconomic pressure and potential fallout from trade policy changes – particularly tariffs – as reasons for the downward revision.
This mixed bag of results underscores a central theme of this earnings season: Companies with strong innovation pipelines and pricing power are thriving, while those exposed to cyclical spending and global trade dynamics are treading water.
Economic Indicators: Cracks in the Foundation?
Despite optimism in equities, the economic data painted a more sobering picture.
- GDP contracted by 0.2% in Q1, marking the first quarterly decline in over a year.
- Jobless claims ticked up, suggesting that the labor market may be cooling after months of resilience.
While a single quarter of negative GDP growth doesn’t constitute a recession, it does raise concerns. Paired with the rise in unemployment claims, investors are starting to question whether the Federal Reserve can maintain its current policy stance without risking a broader slowdown.
Still, the Fed has remained data-dependent, and inflation trends will likely dictate the next move. With PCE data and the next Fed meeting on the horizon, market participants are watching for any sign that policy tightening could be paused – or even reversed – should economic conditions continue to deteriorate.
Sector Snapshot: Who’s Leading, Who’s Lagging
Leaders:
- Technology: Nvidia and Salesforce gains helped lift the broader tech sector.
- Industrials and Materials: These segments benefited from the tariff court ruling, which temporarily eased fears of rising import costs.
Laggards:
- Consumer Discretionary: Best Buy’s warning weighed on the retail segment.
- Financials: Flat performance amid mixed signals from the yield curve and macro indicators.
Outlook: Relief Rally or Temporary High?
So what comes next?
Investors now find themselves in a familiar dance – balancing strong corporate earnings and favorable legal outcomes against a backdrop of macroeconomic uncertainty and political risk.
Short-term sentiment remains constructive, especially as momentum builds in the AI and tech space. But the appeal of the tariff ruling and softening economic data could reintroduce volatility. The VIX remains subdued, but that could change quickly if any shocks emerge from trade headlines or economic releases.
Final Takeaway
May 29 was a classic day of “glass half full” market interpretation. Investors chose to focus on strong earnings and a favorable legal ruling rather than weak economic signals.
But the durability of this rally will depend on what comes next – from both Washington and Wall Street. Whether the bullish trend continues or stalls out will hinge on new data, upcoming legal developments, and whether the Federal Reserve decides to pivot in the face of slowing growth.
For now, the market seems to be enjoying a reprieve. But smart investors know that under the surface, risks are building. Proceed with cautious optimism – and keep an eye on July’s tariff decision, next week’s PCE inflation report, and earnings season updates from sectors tied to the real economy.
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