Stock Market Summary – May 16, 2025

The US stock market showcased signs of growth, many of them from IPOs, this week. The Dow Jones Industrial Average and the S&P 500 were reportedly up 2.6% and 4.5%, while the Nasdaq Composite saw a leap of over 6%. This good performance was attributed partially to improved trade relations between the US and China. The AI sector also significantly influenced these numbers, especially with the success of companies like eToro and CoreWeave.

The Israel-based stock brokerage platform eToro saw its shares jump nearly 29% in its Nasdaq debut after it priced its IPO above the expected range. The artificial intelligence infrastructure provider, CoreWeave, also had a fantastic week with over 60% growth in shares. This led to an above-expected market cap of approximately $38 billion. Moreover, CoreWeave revealed that Nvidia, a major supplier, holds a seven percent stake in the firm, estimated to be about $2 billion worth.

However, companies such as the online lender Klarna and ticket marketplace StubHub had to delay their long-awaited offerings due to turbulence in the market caused by controversial tariff policies rolled out in President Donald Trump’s second White House term.

On the other hand, eight prominent stocks managed to turn green, these include Meta Platforms (up 10%), Goldman Sachs (up 7.6%), Microsoft (up 7.5%), Palo Alto Networks (up 6%), Texas Roadhouse (up 4.6%), Disney (up 0.8%), Nvidia (up 0.4%), and Broadcom (up 0.3%).

On a negative note, shares of UnitedHealth Group plunged by 10% after the Wall Street Journal reported on a DOJ criminal probe into potential Medicare fraud. Finally, Dick’s Sporting Goods announced its plans to acquire Foot Locker in a $2.4 billion deal, while billionaire investor Leon Cooperman revealed his new master limited partnership investment in Sunoco LP.

The stock market had a positive week, with the S&P 500 gaining over 4% and on track for a five-day winning streak, aided by declining interest rates and the 10-year Treasury yield at around 4.4%. Despite the reassurances from Coterra Energy’s CEO, Jim Cramer’s “Mad Money” show didn’t support the oil stock group, citing industry woes. News of delaying AI language model “Behemoth” rollout caused Meta shares to dip. Loop Capital, however, raised Meta’s price target to $888 from $695.

The market managed to recover almost entirely after the initial response to US and China’s earlier tariff announcements. Big Tech companies contributed approximately 60% of the S&P 500’s gains, with Nvidia and Tesla shares climbing over 20% and Meta Platforms and Microsoft rising over 14% this month. Despite this, analysts warned against being overly optimistic, pointing to historical occurrences of double-digit declines following rallies to the S&P 500’s 200-day moving average. Retail giants worried about tariffs’ impacts on consumer prices; Target has already warned of price hikes.

Crypto firm Galaxy Digital started trading on the Nasdaq at $23.50 per share under the ticker GLXY, and its value is said to hinge on crypto and AI’s high-growth areas. Gold prices are believed to have room to move higher, despite the strong recovery in stock markets, with predictions forecasting gold to hit $5,000 next year.

Ned Davis Research caution against going all in on stocks immediately, suggesting investors to wait until they see a fuller picture of tariffs’ effects. The firm’s current strategy suggests maintaining a neutral allocation of 55% stocks, 43% bonds, and 2% in cash. Davis believes that the market’s messages are still mixed, hence the importance of maintaining a neutral stance and being ready for possible adjustments based on new developments.