Stock Market Summary – May 21, 2025

US stocks fell sharply on Wednesday over concerns about the nation’s status as a safe place to invest. The Dow closed lower by 817 points (1.91%), the S&P 500 slid 1.61%, and the Nasdaq fell 1.41%, marking the worst day in a month for all three major indexes. The weak demand for US Treasuries has raised concerns, especially after Moody’s downgraded the US government debt last Friday. The yield on the 10-year Treasury note rose to its highest level since February. In other news, Bitcoin surged to an all-time record high above $109,400.

Warren Buffett, during the Berkshire Hathaway annual shareholder meeting, argued in favor of investing in stocks over real estate. According to Buffett, the larger opportunity in the United States lies in the security market more than in real estate. This is supported by the stock market’s performance over the past four decades.

The stock market’s recovery from the tariff-induced slump has increased volatility. JP Morgan Chase CEO Jamie Dimon warned that the stock market is underestimating the potential for higher inflation and stagflation. Investment advice includes diversifying away from tech, buying undervalued dividend stocks, investing in high-quality bonds, and using gold as a hedge.

TJX Companies, parent company of T.J. Maxx, Marshalls, and HomeGoods, reported a respectable set of Q1 results and managed to hold its full-year guidance unchanged despite tariff issues. The stock dropped more than 3% following the earnings report, representing a buying opportunity for investors according to some analysts.

OpenAI announced that it will be buying AI devices startup io for $6.4 billion in an all-equity deal. The acquisition prompts a deeper foray into hardware for the artificial intelligence company. The startup was founded a year ago by Jony Ive and some Apple alumni.

The S&P 500 halted its six-day winning streak, declining 0.39%, largely driven by the dumping of tech stocks. Following suit, Nasdaq Composite slumped 0.38% while Dow Jones Industrial Average surrendered 114.83 points (0.27%). Elon Musk detailed Tesla’s ambitious road plans during a CNBC interview. President Trump tried, unsuccessfully, to win GOP backing for a key tax bill, facing opposition from Republicans desiring higher deductions on state and local taxes. Google announced several new artificial intelligence products, including Google AI Ultra, a subscription service that offers access to Google’s latest AI developments. In partnership with Google, Warby Parker’s shares leaped over 15% as they prepare to produce a range of smart glasses.

On Wednesday, Wall Street anticipated a somewhat lower opening due to rising bond yields. In the corporate scene, Target’s shares tumbled 5.2% after underwhelming Q1 results and a trimming of its full-year sales forecast. In the cybersecurity sector, Palo Alto Networks’ stock dived 6.8% despite better-than-expected earnings results, due to unexpectedly low gross margins for Q3. UnitedHealth’s shares toppled 5.8% following HSBC’s downgrade of the insurer, despite the health sector typically remaining resilient.

On the brighter side, Canada Goose saw its shares rise 19.6% after a strong fiscal Q4 earnings report. Carter’s shares sagged 12.6% after the announcement of a reduced dividend, while Xpeng’s stock rallied 13% with better-than-expected Q1 loss and robust vehicle delivery forecast.

Bespoke Investment encouraged investors to consider allocating a minor proportion of their capital into stocks that could possibly provide returns of more than 1,000% or “10-baggers”. SoundHound AI and Life Time Group are amongst the firms demonstrating potential for hypergrowth. Larger investments into these firms could substantially boost portfolios.

Bitcoin struck a new all-time high, bolstered by factors such as the de-escalation of the U.S.-China trade war and downgrade of U.S sovereign debt. The cryptocurrency’s price climbed 15% in May, benefitting from abundant liquidity in the stock market. Regulatory reform and corporate treasury investment were anticipated to maintain Bitcoin’s upward momentum.