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U.S. stocks received good news this week, helping the S&P 500 delete its losses to date.
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The S&P 500 is on track to its five-day winning record on Friday.
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Investors are driven from the U.S.-China trade deal, benign inflation data and other developments.
Stocks head to one of its best weeks in 2025.
Good news continued to roll out for investors amid the Associated Press’s probation amid trade tensions on Monday, even as Fed chief Jerome Powell reiterated his cautious outlook on interest rates and the economy.
The S&P 500 index was on its fifth win last Friday, but it has recovered its losses since the beginning of the year, with the index winning nearly 5% since the end of last Friday.
Here are the weekly actions held in the main index:
S&P 500: +4.6%
Dow Jones Industrial Average: +2.7%
Nasdaq Composite Materials: +6.7%
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These are the four forces behind the stock market win week.
After the United States and China reached a framework trade agreement, the market began with a high voice. The deal involves the U.S. appropriation of its tariffs on Chinese goods to 30%, while China reduces tariffs on U.S. imports to 10% of 90 days.
This is not a definite trade agreement and negotiations will continue between the two countries in the coming weeks. However, the news calmed the anxiety of one of the biggest fears in the market right now.
Top Wall Street commentators responded differently to the deal, with many pointing out that U.S. tariff rates are still significantly higher than they have been in decades. Still, many bank researchers have raised their views on economic growth and U.S. stocks after adding more put options after the April 2 tariff unveiling.
Goldman Sachs and Barclays are the people with higher returns on stocks and the risk of a 2025 recession.
"Our latest fair value estimates reflect lower uncertainty, growth in earnings, lower inflation and confidence in the fundamentals of the largest stocks in the index," Goldman Sachs wrote in a note on Monday.
Inflation was unexpectedly cool in April. Consumer prices rose 2.3% year-on-year, reflecting the slowest inflation rate since 2021.
The data eliminates some concerns about stagnation (a troublesome combination of losses high inflation and low growth that has put the U.S. economy in trouble. However, some also warn that the inflation battle is not over and that tariffs will begin to emerge in the coming months.
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Manufacturers' prices also fell unexpectedly in April, with another signal that inflation is cooling down.
The producer price index of final demand fell 0.5% in April, down from the 0% change in March. Meanwhile, the Labor Department said Thursday that the price of ultimate demand services fell by 0.7%, the biggest drop since 2009.
"The decline in price changes colored the April data, and there are few signs of an increase in response to tariffs," Alex Kuptsikevish, chief market analyst at FXPRO wrote in a Netlede. "Of course, commodities under new tariffs won't be reached in states until the second half of May, but the United States did not see a significant uptick early, which is relatively good news."
Cool inflation strengthened the prospect of the Federal Reserve lowering its tax rates in a week.
Markets largely expect the Fed to keep interest rates stable at its policy meeting in June, but the rate reduction in recent weeks has lowered the probability. According to CME FedWatch tools, investors see central banks lower their chances by 77% twice by the end of the year.
Bond yields fell this week as the market repositioned its interest rate outlook. The yield on the U.S. Treasury’s loan benchmark, which Trump closely monitored, fell to 4.39%, down from its 4.54% peak earlier this week.
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