Dow inches higher, S&P 500 caps best May since 1990

U.S. stocks ended Friday on a mixed note after recovering from early losses, closing out a volatile but strong May. 

The S&P 500 finished nearly flat but posted a 6% monthly gain — its best May since 1990. The Dow rose 0.13% on the day, and the Nasdaq slipped 0.3%, despite briefly falling over 1.6% earlier in the session.

For the month, the tech-heavy Nasdaq surged nearly 10% as technology shares continued to drive momentum. The Dow added 4%. Friday’s subdued finish followed reports of expanding U.S. tech restrictions on China and renewed trade tensions.

The Trump administration plans to tighten export rules targeting subsidiaries of firms already on the Entity List, Bloomberg reported. That news came hours after former President Trump accused China of violating its existing trade deal on social media. 

Treasury Secretary Scott Bessent said talks with China are “stalled” and suggested a Trump-Xi call is needed to advance negotiations.

Trump’s tariff uncertainty 

Meanwhile, legal uncertainty surrounding tariffs added to investor anxiety. A U.S. appeals court temporarily allowed Trump-era tariffs to remain in place, reversing a trade court’s earlier decision. 

The administration is also weighing a 15% duty for up to 150 days under the Trade Act of 1974.

Despite the geopolitical and legal headwinds, investors found optimism in cooling inflation. The Fed’s preferred inflation gauge—the core Personal Consumption Expenditures index—rose in line with forecasts in April, helping temper fears of further rate hikes.

Health care was the only S&P 500 sector to post a monthly loss, down nearly 6%. All other major sectors finished May in the green, buoyed by easing inflation and strength in tech.

Markets head into June with gains intact, but trade policy remains a looming risk.