Market Report for Monday, May 12, 2025
Last Thursday, President Trump said “buy.” Investors saluted, clicked, and positioned for a trade breakthrough. On Monday, they got one. Nothing moves risk-on sentiment quite like 115 percentage points of tariff relief and a bullhorn cranked to 11.
Level Change 5/12/25 (%)
– – – – – – – – – – – – – – –
+2.8 Dow
+4.4 Nasdaq
+4.0 Nasdaq 100
+3.3 S&P 500
+3.5 S&P 400
+3.7 S&P 600
Stocks exploded Monday on word that US-China tariffs will fall sharply for at least 90 days, a ceasefire engineered in the Alps and packaged as a Trump-branded miracle. The S&P jumped 3.3%, putting it within 5% of February’s record close and nearly flat on the year. When you open a 145%-tariff umbrella, closing it looks bullish.
Per the new deal, the US will slash its levies on Chinese goods from 145% to 30%, while China trims its 125% bite down to a daintier 10%. That 30% US number includes 10% for general irritation and a 20% fentanyl-linked penalty—because nothing has hampered US progress more than synthetic opioids.
The deal exceeded expectations. Just Friday, Trump floated 80% as a target, and weekend press whispers pegged a best-case cut at 50%. Instead, negotiators in Geneva spun a full policy pirouette. Treasury Secretary Scott Bessent declared “neither side wants a decoupling,” and everyone nodded like they hadn’t just spent two months saying the opposite.
The relief rally lifted all boats, tech luxury yachts first. Amazon and Meta led the Mag 7 charge with 8% gains, as optimism spread like a social media algorithm freed from content moderation. Even small caps joined the parade, wedged into the jet-ski compartment.
Outside of tariffs, the GOP’s reconciliation bill reached a $5T price tag—$500B over budget and still not counting Trump’s tax-cut promises. Medicaid cuts were reportedly dialed down, either to soften the optics or because someone hid the scissors.
Elsewhere in Washington, Trump announced a “most favored nation” drug-pricing policy. That means benchmarking US drug costs to cheaper foreign prices, a move sure to delight American patients and irritate every pharma lobbyist with a golf membership. Without the ability to fleece Americans, big pharma might need to hold their meetings at Marriott instead of Monaco.
The Fed’s April Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) report found banks tightening the screws on credit card lending, while leaving auto and other consumer loan standards mostly unchanged. Businesses of all sizes reported cooling credit appetite, and lenders seemed in no hurry to reignite it. The message to stretched households inching toward the checkout: bring cash—and maybe a coupon.
Fed Governor Adriana Kugler noted the economy’s resilience, but warned that tariff-related price hikes may outlast the tariffs themselves. If only she’d scheduled her remarks before the post-tariff party. All she could do was nod politely and admit the weekend deal was “obviously … an improvement” in trade relations.
Naturally, better trade news means worse odds for rate cuts. In this upside-down logic, progress is a problem. Markets now expect just over 50 basis points of Fed easing this year, down from 100 two weeks ago, before Geneva gave Powell a reason to keep his hands in his pockets.
Monday wrapped a classic Trumpian trade whiplash: Threaten, escalate, spook stocks, then declare victory near the original starting line. Stocks soared. Mission accomplished. Until the next tweet.
— Jason Kelly
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The free list is where markets “might boom.” The paid tier is where we confirm, “Oh, there was a boom, all right.”
