Markets Surge, Tariffs Fall: Inflation Cools and Confidence Returns
- Daniel Ledenev
- May 18
- 5 min read
Updated: Jun 8
👋 Welcome Back Investors! (May 12 to 16, 2025)
By now, you know the drill, we’re back with another week of clean, no-fluff market insights. Whether you’ve been following since the first post or just catching up, this space is your go-to for staying sharp without drowning in noise. This week came with its own rhythm, less chaos, more clarity. As markets continued to find their footing, key shifts started to take shape beneath the surface. Let’s break it down.
📊 Stocks Rally as Inflation Cools and Tech Leads the Way
Tuesday, May 13 marked a big bounce for U.S. equities, with all three major indexes closing higher which was fueled by softer inflation data and strong gains in the tech sector. According to CNBC, the Consumer Price Index (CPI) report for April showed inflation slowing more than expected, easing concerns that had been weighing on both Wall Street and the Fed. The S&P 500 rose 1.6%, the Dow gained 1.2%, and the Nasdaq surged 2.4%, driven by heavy buying in tech giants like Nvidia, Meta, and Microsoft. With CPI coming in below forecast, the market is starting to price in the possibility of a Fed rate cut sooner than previously expected, possibly as early as late summer. Investors were also relieved to see core CPI, which strips out food and energy, continue its gradual descent. This gave the Fed some breathing room, and analysts noted that the “higher for longer” narrative might be losing steam, for now.
In short: Tuesday’s rally wasn’t just relief, it was confidence. With inflation finally cooling and no major surprises in sight, the market found room to run. Whether it holds will depend on how the Fed responds next.
💂 UK Wage Growth Slows as Labor Market Cools
Across the pond, economic signals out of the UK pointed to a cooling labor market. As reported by The Guardian, wage growth slowed, job vacancies fell, and payroll numbers dipped, suggesting that the Bank of England may be getting closer to ending its tightening cycle. Specifically, regular pay (excluding bonuses) rose by 5.7% in the three months to March, down from 6% in the prior period. Meanwhile, job vacancies dropped for the 21st consecutive month, and payrolls declined by 85,000 in April — a sharper fall than expected.
Markets interpreted this as a sign that inflationary pressure from the labor market may finally be easing. For the Bank of England, this could mean less urgency to raise rates further, and possibly more room to start easing policy later this year. While the UK data may not have moved U.S. markets directly, it contributed to the broader global narrative this week: inflation is cooling, and central banks might soon pivot. Investors watching Europe and the U.S. alike will be paying close attention to how wage and labor trends evolve in the coming months.
🏦 Big Banks Get a Break: U.S. to Ease Capital Rules
In a major regulatory shift, U.S. financial regulators are preparing to ease capital requirements for large banks, according to The Financial Times. This would mark the first significant rollback of post-2008 financial crisis rules, and investors are paying attention.
The key change involves the Supplementary Leverage Ratio (SLR), a rule that forces banks to hold a minimum amount of capital relative to their assets, regardless of risk. Regulators are now considering adjustments that would allow banks to exclude certain low-risk asset like Treasury's from the calculation. That would effectively free up capital, enabling banks to increase lending, boost buybacks, or expand investment activity. Proponents argue this will make U.S. banks more competitive globally, especially as European and Asian counterparts operate under looser frameworks. Critics, however, warn it could reintroduce systemic risk if not done cautiously.
For markets, the signal is clear: Washington is easing up on Wall Street. And for investors, especially those in bank stocks, that could mean more room for growth and risk on the balance sheet.
🌏 Global Markets Surge as U.S. and China Slash Tariffs
One of the biggest headlines of the week came from the international front: the U.S. and China announced a major rollback of tariffs, sending global markets sharply higher. As reported by Investopedia, the two economic superpowers agreed to temporarily lift tariffs on hundreds of goods, a 90-day window that investors are calling a potential turning point in global trade relations. The move comes after months of rising tension and retaliatory policies that had weighed heavily on supply chains and corporate earnings. With this agreement, sectors like technology, manufacturing, and consumer goods got an immediate boost. Stocks rallied not just in the U.S., but across Asia and Europe as optimism rippled through markets. The Dow Jones surged over 1,000 points on the news, while the Hang Seng and Shanghai Composite also posted significant gains. The relief rally suggests that investors are still highly sensitive to geopolitical developments and eager for any signs of de-escalation.
While the tariff cuts are temporary, they offer a much-needed breather to global trade, and could pave the way for a longer-term agreement. For now, markets are treating it as a win.
👀 Stocks to Watch: What This Week’s Moves Reveal
With markets climbing on cooling inflation and global trade relief, a handful of stocks and sectors stood out from the rest. Based on the news and price action from May 12 to 16, here are the names that turned heads:
Nvidia (NVDA) – Continued its rally as investors piled into AI and chip stocks, boosted further by optimism around a potential Fed rate cut and easing inflation data. NVDA remains a bellwether for tech momentum.
JPMorgan (JPM) – Bank stocks saw fresh attention after news that U.S. regulators plan to ease capital requirements. JPMorgan, already a sector leader, could benefit directly from more flexible balance sheet rules.
Alibaba (BABA) – Gained strong upside following the U.S. and China tariff rollback, with investors betting on renewed strength in cross-border commerce and consumer sentiment in China.
Meta (META) – Jumped on broad tech strength and easing inflation worries. With ad spending expected to rebound and AI initiatives gaining traction, Meta continues to attract bullish attention.
From regulation shake-ups to global policy shifts, these tickers reflect the key forces moving markets, and are worth watching closely as we head into the next trading week.
🛎️That’s a Wrap!
That’s it for this week’s market breakdown, appreciate you tuning in! With inflation easing, global trade tensions shifting, and central banks back in focus, the second half of May is already shaping up to be full of moves worth watching. We’ll be back next week with another quick-hit recap of what mattered, what moved, and what’s next for the markets.
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