That old saying didn’t apply last month. The S&P 500 surged 5.49% to close at 5,911.69, marking its best May since 1990. Driving the rally was a historic U.S.–China trade agreement on May 12, which slashed tariffs and reignited bullish sentiment. Add in strong corporate earnings, surging tech investment, and easing inflation, and markets had plenty of fuel. However, volatility returned late in the month when President Trump accused China of violating the deal—triggering a brief sell-off on May 30 and reminding investors that even strong trends carry risk.
Tariffs Still Rule the Narrative
In a headline-driven market, tariffs continue to steer sentiment. The Geneva-brokered deal reduced U.S. tariffs on Chinese goods from 145% to 30%, and Chinese tariffs on U.S. goods from 125% to 10%, valid for 90 days. The announcement triggered a 3.26% surge in the S&P 500 on May 13 to 5,844.19, erasing year-to-date losses. Trade-sensitive sectors like technology and consumer discretionary led the charge. But on May 30, renewed trade tensions briefly pulled the index down 1.16%, keeping investors on their toes.
Tech and Retail Outperform
Despite the dip, the S&P 500 and Nasdaq posted their strongest monthly gains since November 2023.
- Technology (30.3% index weighting) rallied on the back of AI-driven optimism, with NVIDIA and Broadcom each gaining over 5% post-deal.
- Consumer discretionary stocks (10.3%) — particularly retail — also outperformed.
The bullish narrative held firm… unless TACO (“Trump Always Chickens Out”) turns out to be true.
Technicals: Testing Resistance, Showing Resilience
The technical landscape mirrors the market’s cautious optimism.
- The S&P 500 failed two breakout attempts at the psychological 6,000 level on May 19 and May 29, cementing it as a near-term resistance zone.
- Despite that, pullbacks remained well above the 200-day SMA, with buyers stepping in at the 5,767 level—establishing a sturdy short-term support.
Structurally, the index appears to be carving out a handle pattern, suggesting that it’s digesting gains before a potential breakout. The late-May consolidation is also forming a bullish flag, a classic continuation setup. If trade tensions ease or earnings momentum persists, a clean breakout above 6,000 could trigger the next leg higher. Until then, price action is constructive but cautious.
Meanwhile, a symbolic moment: Elon Musk showed up to the White House with a literal black eye on his last day as a “special government employee.” After 130 days attempting to cut $1 trillion in federal spending, the initiative fell flat. Tesla may have bounced, but Musk’s public image — and perhaps his patience — took a hit.
Zooming out, Ray Dalio warns that the world has entered the final stage of a long-term debt cycle, with the U.S.—as global leader—grappling with unresolved structural fiscal challenges. Even iconic innovators like Musk, the “Iron Man” behind Tesla and SpaceX, have walked away from policy influence, unable to address the deeper cracks. Meanwhile, the techno-authoritarian ambitions of Musk and Peter Thiel have lost steam in this cycle.
If Elon’s black eye is a symbol, it’s this: fixing the system might just be mission impossible.
*For now, the market trend remains bullish, supported by resilient technical and strong sector leadership. But macro risks remain fluid. We continue to watch key resistance levels, trade headlines, and fiscal policy signals closely.
Please reach out if you’d like to review your portfolio positioning or strategy in light of these developments.