May 26-30 2025 Stock Market Forecast: Outlook & Strategy

Market Update: Tariff Tensions and Mixed Retail Signals Weigh on Stocks

As anticipated in lastweek’s forecast covering May 19 to May 23, the stock market kicked off with optimism but ended the week in decline. Tariff concerns dominated headlines as President Trump returned to his trademark stance, threateningAppleand other smartphone manufacturers, includingSamsung,with a 25% tariff if they failed to produce in the United States. In parallel, talks with the European Union remain tense, with the President warning that a 50% tariff could be imposed in June unless the EU changes course.

Given that the EU accounts for roughly 17.8% of U.S. trade, such a steep tariff would almost certainly trigger reciprocal measures, escalating trade tensions further. Meanwhile, negotiations with Japan appear equally fraught. A fourth round of talks is slated for late May, just ahead of the mid-June summit between Prime Minister Shigeru Ishiba and President Trump. Ki-Wealth assesses the chances of a preliminary or partial agreement during this period as moderate, between 40% and 60%, with a whole deal likely not until the G7 summit in June. Key sticking points include auto tariffs and non-tariff barriers, which remain unresolved.

The current tariff “pause” affecting most countries except China is roughly halfway through, yet no substantive agreements have emerged, aside from a tentative deal with the U.K. that still lacks finalized details.

Retail earnings last week painted a mixed picture. Even companies maintaining their outlooks acknowledged the uncertainty ahead, citing multiple variables that could disrupt forecasts. Consumer spending remains resilient in certain sectors, such as home improvement and leisure travel, but shoppers are exercising more caution.Walmartannounced plans to raise prices by the end of the month, andNikeimplemented apparel price hikes last week. Retailers that have yet to increase prices reserve the option to do so if circumstances shift.

Market volatility is heightened by soaring uncertainty, with particular focus on the 10-year Treasury yield, which has steadily climbed since early May. While stocks have so far shrugged off this trend, surpassing a 4.63% yield could trigger downward pressure on equities.

The U.S. 10-year Government Bond Yields

Reflecting these dynamics, major indices closed the week lower: the S&P 500 fell 1.69%, the Nasdaq 100 dropped 1.05%, the Dow Jones Industrial Average declined 2.21%, and the Russell 2000 small-cap index lost 2.05%.

In summary, the week spanning May 19 to May 23 revealed a shift toward a more cautious investor stance. Technology stocks faced notable pressure, with the sector declining 3.16% week-over-week. The consumer cyclical sector also lagged, falling 2.86% and underperforming the broader market. Real estate was among the weakest performers, dropping 3.64%. In contrast, utilities gained attention on Friday, May 23, rallying 1.28% as investors sought defensive positioning ahead of the long weekend. Looking ahead, the trading week from May 26 to May 30 will be abbreviated, with U.S. markets closed for Memorial Day on Monday, May 26, and Austrian and Swiss markets closed on May 29 for a local holiday. Despite these closures, key macroeconomic, political, and earnings releases scheduled between May 27 and May 30 will remain in focus.

Bearish Outlook for May 26–30 Amid Rising U.S.-EU Trade Tensions

The week of May 26 to 30 appears tilted toward a bearish stance as markets brace for key macroeconomic data releases and escalating trade disputes. The spotlight is on tariff negotiations between the U.S. and the European Union, where ongoing uncertainty is likely to unsettle investors and exert downward pressure on equities.

U.S. President Donald Trump has proposed a sweeping 50% tariff on all EU imports, set to take effect June 1, 2025. His recent comments suggest a hardening position, describing talks with the EU as “going nowhere” and indicating no intention to pursue a deal. This marks a sharp escalation in trade tensions with the potential to disrupt transatlantic commerce significantly.

The European Commission remains engaged, awaiting clarification from U.S. Trade Representative Jamieson Greer. The EU’s offer includes zero tariffs on industrial goods and commitments to increase purchases of U.S. liquefied natural gas and soybeans. Additionally, the EU has sought cooperation on addressing global steel overcapacity, particularly concerning China. A key discussion between EU Trade Commissioner Maroš Šefčovič and Greer occurred on May 23, with a follow-up meeting tentatively planned for early June in Paris.

Market sentiment is expected to reflect these tensions, with a bearish tone prevailing throughout the week. According to analysis fromThe Budget Lab at Yale,the proposed 50% tariff could raise the average effective U.S. tariff rate to 21.9%, a level not seen since 1909. The tariff might also dampen U.S. GDP growth by 0.2 percentage points in 2025 and drive up consumer prices, notably in the apparel and footwear sectors.

Considering the current political dynamics and expert views, Ki-Wealth estimates the probability of a deal being reached during the week of May 26–30 at a modest 20–30%. While low, this leaves a glimmer of possibility amid a predominantly cautious market environment.

U.S. Consumer Confidence Set for Critical Review Amid Economic Uncertainty

The upcoming release of the U.S. Consumer Confidence report on May 27 promises to provide valuable insights into the current state of consumer sentiment. Analysts, including those at Ki-Wealth, remain cautious, anticipating that consumer confidence will continue to falter. This outlook is driven by ongoing uncertainties surrounding trade policies, political instability, and persistent inflationary pressures. Notably, April’s Consumer Confidence Index saw a sharp decline from 93.9 to 86.0, continuing a steady downward trajectory that underscores mounting concerns about tariffs. This trend is echoed by the Michigan Consumer Confidence Index, which has also been showing a similar pattern of decline.

Durable Goods Orders Poised for Solid Growth Amid Shifting Trade Dynamics

The upcoming U.S. Durable Goods Orders report for April 2025, set for release on May 27, is expected to show a 7.5% increase month-over-month. This robust forecast reflects ongoing strength in transportation equipment orders, a resurgence in capital goods signaling renewed business investment, and strategic inventory buildup ahead of potential European Union trade tariffs.

That said, the projected growth marks a slowdown from March’s 9.2% surge, suggesting the momentum may ease in the coming months. The trajectory into May and June will likely hinge on developments around tariff negotiations, with uncertainty potentially weighing on future orders.

Key Economic Events to Watch: FOMC Meeting, Q1 GDP Update, and Core PCE Index

On Wednesday, May 28, attention will turn to the Federal Open Market Committee (FOMC) meeting. Fed Chair Jerome Powell and other members are expected to share insights on consumer confidence, GDP, and inflation trends. While their remarks will be closely monitored, no significant market reaction is anticipated. The actual interest rate decision is scheduled for mid-June, leaving ample time to assess how the U.S. economy adapts amid current tariff conditions. The latest Fed Watch data shows a 94.4% chance that interest rates will remain steady on June 18.

The following day, May 29, will bring the second preliminary estimate of U.S. GDP for the first quarter of 2025. Projections currently suggest a 0.3% year-over-year contraction for Q1.

Friday, May 30, will focus on the U.S. Core Personal Consumption Expenditures (PCE) index, with expectations pointing toward no change. However, the Chicago Purchasing Managers’ Index (PMI) will draw more interest, as recent forecasts predict a drop from 47.0 in April to 44.6, signaling ongoing contraction in the U.S. manufacturing sector.

Navigating Trading Strategies from May 26 to May 30

As investors and traders prepare for the week ahead, it’s important to consider key market dynamics shaping the trading landscape from May 26 through May 30. The U.S. stock market will be closed on Monday in observance of Memorial Day, leading to subdued activity in European markets characterized by low volume and a bearish bias driven by ongoing tariff uncertainties.

Starting Tuesday, a focus on technical trading levels over fundamentals and earnings is advisable. Notable price action is expected in individual names such as NVIDIA, Dell Technologies, and Salesforce, but the broader market’s direction will hinge on the behavior of major indices like the S&P 500 and Nasdaq 100.

Technically, the S&P 500 faces a critical juncture. The index is hovering near key support zones at 5,773 and 5,766. A breach below these levels could trigger a further decline toward 5,640. The previous week’s chart activity revealed resistance near the 78.6% Fibonacci retracement around 5,859, accompanied by rising selling volume, indicating the index is likely to trade within a range between 5,760 and 5,945—or possibly below its support levels.

S&P 500 Index Daily Technical Chart, May 25, 2025

This week’s financial results from companies including NVIDIA, Dell, Salesforce, and retailers like Gap, Best Buy, and Macy’s will be pivotal in shaping the market’s next move, providing crucial signals amid an otherwise technically driven environment.

Nasdaq 100 Eyes Key Resistance Level: Trading Strategy For the Week

Examining the daily technical chart of the Nasdaq 100 Index reveals a more favorable outlook for tech stocks compared to the broader S&P 500. The Nasdaq 100 currently trades well above its support zones at 20,384 and 20,305, providing ample room to move sideways while maintaining its bullish stance above both the 100- and 200-day simple moving averages.

Looking ahead, a robust earnings forecast from NVIDIA for Q2 of fiscal year 2026 could propel the Nasdaq 100 toward its recent peak near 22,100. Using a straightforward model that assumes normally distributed returns and factors in a 3-day implied volatility of 2.5%, the chance of the index hitting or surpassing 22,100 between May 28 and 30, 2025, stands at roughly 9.54%. This moderate probability suggests that while not the most likely outcome, a strong earnings surprise from NVIDIA could trigger a rally across the tech sector, pushing the index to these heights.

Investors should consider taking profits or trimming underperforming positions if the Nasdaq 100 approaches 22,100, as the risk of a short squeeze intensifies near this resistance level.

Nasdaq 100 Index Daily Technical Chart, May 25, 2025

Earnings To Watch This Week

As I mentioned above, this week, the spotlight falls on NVIDIA, Dell Technologies, and Marvell Technology earnings reports. Their guidance for the upcoming quarter will be crucial for shaping the outlook of technology and semiconductor stocks. I was hoping you could review mydetailed earnings preview report covering these three companies.

Additionally, keep an eye on the earnings announcements fromSalesforce (CRM), ZScaler (ZS),Nutanix Inc. (NTNX), andC3.ai (AI), which could offer valuable insights into the sector’s momentum.

Monday:Memorial Day Holiday (Closed)

Tuesday:PDD,AZO, OKTA, BOX

Wednesday:DKS, ANF, M,NVDA, CRM,AI,ELF,NTNX, A

Thursday:BBY, CAL, BURL, KSS,MRVL. COST, DELL, ZS, ULTA, GAP, AMBA

Friday:CGC, SCVL

Promising Stocks To Include On Your Investment Radar

Ki-Wealth’s investment strategy for the week emphasizes a cautious, wait-and-see approach. Given the current high level of market uncertainty, it’s best to avoid establishing substantial, long-term stock positions. Selective stock-picking strategy is the key to building the solid investment portfolio that outperforms the broad stock market.

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