U.S. Stocks Extend Rally as Fed Rate Cut Hopes Lift Sentiment Ahead

Wall Street Gains for Fourth Straight Day Amid Economic Softness
The S&P 500 rose 0.41% on Thursday, May 15, 2025, closing at 5,916.93—its fourth consecutive daily gain and now just 3.7% below its all-time high. The index’s rally comes on the back of easing inflation pressures, encouraging speculation that the Federal Reserve may soon pivot to rate cuts.

Investor optimism was supported by weak U.S. retail sales data and lower-than-expected wholesale inflation. Both indicators suggest that consumer demand is cooling just enough to give the Fed room to ease policy, without pushing the economy into contraction. The SPDR S&P 500 ETF Trust (SPY), which mirrors the index, also ticked up, closing at $590.46.

Meanwhile, the Dow Jones Industrial Average climbed 0.6% to finish at 42,322.75, while the tech-heavy Nasdaq Composite fell 0.2% to 19,112.32, snapping a six-day winning streak. Analysts attribute the slight Nasdaq pullback to profit-taking in high-growth sectors, particularly following sharp rallies in Nvidia, Tesla, and AMD earlier in the week.

The broader momentum remains bullish, reflecting growing confidence in a “soft landing” scenario, where inflation moderates without triggering a major economic slowdown. More on this market development is covered in AP’s market wrap.

Friday Outlook: Watch for Trade Moves and Fed Signals
Looking ahead to the next trading session on Friday, May 16, several factors are expected to influence market direction:

First, trade policy remains a key variable. The recently announced 90-day tariff truce between the U.S. and China has temporarily lifted investor sentiment, especially in sectors sensitive to international logistics and supply chains. However, the potential for policy reversals or further escalation keeps markets on edge. Full details on the truce’s impact can be found via AP News.

Second, market participants are closely monitoring the Federal Reserve’s next steps. While the latest inflation reports favor a dovish tilt, officials have yet to signal clear timing for rate adjustments. A cautious Fed could temper enthusiasm in the near term, particularly if Friday’s economic indicators paint a mixed picture.

Lastly, behavioral indicators are also flashing yellow. According to recent analysis, dip-buying activity by retail investors has slowed, which could signal waning momentum behind the rally. This shift may indicate short-term fatigue and an increased risk of volatility if macro data disappoint. You can read more on this trend via Business Insider.

In summary, while equities remain resilient and upward-trending, Friday’s trading session may bring more cautious positioning as investors weigh policy signals, consumer data, and global trade cues. The balance between hope and hesitation continues to shape the 2025 bull narrative.