From Yahoo Finance: 2025-05-16 19:47:00

US stocks surged this week, with the S&P 500 erasing year-to-date losses. The market is set for one of its best weeks in 2025, boosted by the US-China trade deal and benign inflation data. The S&P 500 was on track for a 5-day winning streak, up nearly 5% since last Friday.

The US and China reached a 90-day trade agreement, easing market fears. Top Wall Street analysts have mixed reactions, but many are optimistic about economic growth and stock returns. Goldman Sachs and Barclays raised their outlooks, citing reduced uncertainty and faster earnings growth.

Inflation was unexpectedly cool in April, with consumer prices rising 2.3% year-over-year, the slowest pace since 2021. This data helped dispel concerns of stagflation. Producer prices also fell, signaling a cooling inflation trend. Tariffs may impact prices in the coming months.

Cooler inflation boosted expectations for Fed rate cuts. Markets anticipate the Fed to hold rates steady in June, but rate cut probabilities for the year have increased. Bond yields drifted lower as the market repriced rate outlooks, with the 10-year US Treasury yield dropping to 4.39%.

Read more: These 4 forces are driving stocks toward a 5-day winning streak this week