[New York Stock Market] Stocks Rise Despite Declining Consumer Sentiment... Optimism Over US-China Trade Talks

Reuters Yonhap News

The three major stock indices on the New York Stock Exchange all closed higher. Optimism stemming from the results of the US-China trade negotiations drove the rise in stock prices.

On May 16 (local time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average (Dow) closed up 331.99 points, or 0.78%, at 42,654.74.

The Standard & Poor's (S&P) 500 Index rose 41.45 points, or 0.70%, to 5,958.38, while the Nasdaq Composite Index gained 98.78 points, or 0.52%, to close at 19,211.10.

Stock prices rose as the United States and China agreed to mutually suspend tariffs. Although the US consumer sentiment index for May declined and short-term expected inflation showed an unusually sharp increase, investors were largely unaffected.

According to the University of Michigan, the preliminary US consumer sentiment index for May was 50.8, down 1.4 points from the final reading of 52.2 in April. The market consensus was 53.4.

One-year expected inflation also jumped to 7.3% from 6.5% in April, marking the highest level since 1981.

Carly Cox, chief market strategist at Resoltz Wealth Management, said, "This week, relief over the reduction of tariffs on China dominated the market," adding, "Buying was led more by investor sentiment than by economic indicators."

US President Donald Trump stated that he would set tariffs on major trading partners within a few weeks, but the impact on the market was limited.

President Trump, meeting with business leaders in the United Arab Emirates (UAE), said, "There are as many as 150 countries that want to make agreements with us, but we can't see that many," adding, "I expect Scott (Treasury Secretary Besant) and Howard (Commerce Secretary Rutnick) will send letters within the next two to three weeks."

By sector, all sectors except energy rose. Consumer staples, healthcare, industrials, real estate, and utilities each gained more than 1%. Overall, blue-chip stocks showed stronger performance.

By individual stock, semiconductor manufacturer Applied Materials fell more than 5% after announcing that its first-quarter results this year fell short of market expectations.

UnitedHealth Group, the largest US insurer, rebounded by 6.40%. UnitedHealth had seen sharp declines earlier in the week, dropping 10.93% on May 15 and 17.79% on May 13.

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of the federal funds rate remaining unchanged in July, as reflected in the federal funds futures market, was 91.66.9%, up about 3 percentage points from the previous day's close. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 0.59 points, or 3.31%, to 17.24.