US stock market today: Market rise as S&P 500 nears record, Nasdaq jumps on chip optimism, Dow climbs 100+ points ahead of May CPI report and US-China trade deal

US Stock market gains after lower May inflation data and U.S.-China trade breakthrough- US Stocks rose on Wednesday, May 26, 2025, as investors reacted to cooler-than-expected inflation data and a key trade consensus between the United States and China. The market showed signs of renewed optimism, with all three major indexes closing higher after the release of new economic data and statements from both President Donald Trump and Chinese officials.

How did the U.S. stock market perform after the inflation report?

The Dow Jones Industrial Average climbed 126 points, or 0.3%, while the S&P 500 edged up by 0.1%. The Nasdaq Composite gained 0.2%, adding to the momentum that’s been building in recent days. The S&P 500 has now posted gains in six of the past seven trading sessions, and it’s sitting just under 2% below its February record high. Earlier this year, the index had fallen about 20% below its peak, showing just how much sentiment has improved since.

This positive momentum helped major indexes climb:

• S&P 500 rose about 0.6%, inching closer to its all-time high near 6,144.
  
  
• Nasdaq Composite jumped 0.6% to hit roughly 19,715, as tech stocks led the charge.
  
  
• Dow Jones Industrial Average added around 105 points, closing near 42,867, up about 0.25%.
  
  

Which stocks were the big movers?

Tech and chip stocks took the spotlight, especially with hopes rising around export relief. Among the top performers:

• Tesla (TSLA) surged 5.7%, notching its third straight gain, although the stock remains over 30% below its 52-week high.
  
  
• Intel soared 8%, as traders bet on trade concessions favoring U.S. chipmakers.
  
  
• Nvidia and AMD also posted solid gains as sentiment around the semiconductor sector turned bullish.
  
  

However, not all sectors joined the rally. Consumer staples underperformed, with J.M. Smucker plunging nearly 16% after slashing its forward guidance.

What’s going on with inflation and interest rates?

While the market remains upbeat, a big test comes today: May's Consumer Price Index (CPI) report. Analysts are expecting 0.3% month-over-month inflation, up from April’s 0.2%. A hotter-than-expected reading could shake confidence and delay hopes of a Fed rate cut later this year.

Meanwhile, the 10-year Treasury yield held steady around 4.47%, showing that bond investors are waiting cautiously for the inflation numbers before making any big moves.

What should investors watch today?

1. May CPI and PPI data – These will heavily influence the Federal Reserve’s next move on interest rates.
   
   
2. More news on U.S.–China trade talks – Any confirmation of export relaxations could spark further gains, especially in tech.
   
   
3. Sector shifts – Tech and energy are leading, while defensive names are under pressure.
   

Tesla shares stood out again, rising more than 2%, marking their fourth consecutive winning day. This move came after CEO Elon Musk said he regretted some of his past social media posts related to Trump. Meanwhile, quantum computing stocks jumped sharply following remarks by Nvidia CEO Jensen Huang, who said the sector was “reaching an inflection point.”

What did May inflation data reveal, and why does it matter?

The market’s reaction was heavily driven by the Consumer Price Index (CPI) report for May. According to data released Wednesday, CPI rose 0.1% from April, which is below the 0.2% increase economists had forecast, based on a Dow Jones survey.

The core CPI, which removes volatile food and energy prices, also came in at just 0.1%, again under expectations. This signals that inflation pressures may be easing, despite lingering concerns tied to global supply chains and tariff impacts.

Alexandra Wilson-Elizondo, global co-CIO of multi-asset solutions at Goldman Sachs Asset Management, said,

“Inflation in May was lower than anticipated, suggesting the tariffs aren’t having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand.”

She also noted that with the current 90-day pause on tariffs, markets will be watching closely for shifts in inflation and employment data. If inflation remains contained or the labor market shows weakness, the Federal Reserve could look at lowering interest rates in the future.

What’s in the new U.S.-China trade agreement?

A major tailwind for the market came from news that U.S. and Chinese officials had reached a preliminary trade agreement during talks held in London. The framework includes the approval of rare earth mineral exports by China, while the U.S. will ease restrictions on advanced technology sales to China.

President Donald Trump posted on Truth Social that the deal was “done, subject to final approval with President Xi and me.” He also emphasized that

“WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%.”

As part of the agreement, China will front-load shipments of magnets and other rare earth materials, and the U.S. will allow Chinese students to attend American colleges and universities, which had been previously restricted under technology-related policies.

Trump described the agreement as a

“great WIN for both countries,”
highlighting its potential to boost bilateral trade while keeping American industries competitive.

Why are rare earth minerals and tech restrictions important?

Rare earth minerals are essential for producing electronics, defense equipment, electric vehicles, and renewable energy technologies. By agreeing to resume rare earth exports, China is reopening a critical supply chain that had previously faced disruptions due to geopolitical tensions.

In return, the U.S. lifting restrictions on high-tech sales—especially semiconductors, AI chips, and quantum computing components—offers companies like Nvidia, Intel, and other tech giants more flexibility in doing business with Chinese clients.

This exchange helps de-escalate trade tensions that had been building since earlier in 2024 and clears a path for increased corporate investment and cross-border growth.

What’s next for the Federal Reserve and interest rates?

While the market welcomed the positive developments, investors are still keeping a close watch on the Federal Reserve. The Fed is trying to balance slowing inflation with stable employment data as it considers whether interest rate cuts might be needed in the months ahead.

If inflation continues to ease and job numbers come in weak or flat, the central bank could shift to a more dovish stance. This would likely benefit stocks further, particularly growth sectors like tech and consumer discretionary.

For now, traders and analysts are encouraged by the progress on both the inflation and trade fronts, but they know that the road ahead still holds uncertainty—especially with the 90-day tariff window and more Fed meetings scheduled in the coming weeks.

Why does all this matter for investors?

Wednesday's gains reflected growing investor confidence fueled by a cool inflation report and signs of de-escalation in U.S.-China trade tensions. If these trends continue, markets could keep climbing, especially if the Federal Reserve pivots toward rate cuts.

With Tesla, Nvidia, and other key stocks gaining ground, and tariff concerns temporarily eased, investors are cautiously optimistic about the summer market outlook.

But as always, data releases, central bank signals, and geopolitical developments will continue to drive short-term moves. For now, though, Wall Street seems to be breathing a little easier.

FAQs:

Q1. Why did stocks rise after the May 2025 inflation data?
Stocks rose because inflation was lower than expected, easing rate cut concerns.

Q2. What’s in the new U.S.-China trade agreement in May 2025?
The deal includes rare earth exports from China and relaxed U.S. tech restrictions.